How are taxes calculated?

This article explains how and what tax rates we apply to your sales. Since you are selling in your own name with Tentary, you should make sure that you are aware of the tax rates that apply to you. We display the applicable taxes in the payment process and on invoices (which your buyers can optionally request), as well as in monthly reports.

Important: We do not deduct taxes for you and do not provide tax advice. However, the settings below will make your accounting easier, as we will calculate the appropriate taxes at the time of purchase and list them clearly in your monthly reports.

Different settings are applied depending on your location, which you specify in the billing preferences. Go to the section for EU based sellers or the section for non-EU based sellers.

Sections

non-EU based sellers
EU based sellers
Taxes on invoices
Tax summary for sales (monthly reports)

An overview of the tax rates we currently apply to your sales.

Non-EU based sellers

In many countries, taxes are due in the buyer's country when digital products are sold. With Tentary, you can easily define if, when, and how much tax should be calculated.

Activate the "Calculate taxes for sales" option in the billing preferences to enable individual tax calculation. After enabling this option, you can define tax rates and corresponding tax numbers (if available) for individual countries or regions. You can also define a tax rate for all countries not explicitly mentioned ("Worldwide").

If you sell to customers in the EU and pay VAT, you only need to enable the "EU VAT" region. This option will automatically calculate the correct taxes for sales to customers in the 27 EU countries.

Once you have saved your settings, you can see here what tax rates we have calculated for your sales.

EU based sellers

Tentary makes it easy for you by automatically calculating the appropriate VAT rates on sales. This calculation is based on the information you provide via your billing address. You have the option to enter your tax number or VAT ID, and to indicate whether the small business rule or the OSS procedure applies to you.

See which tax rates we've calculated for your sales.

Basically, every time you sell something, you have to pay sales tax (commonly referred to as VAT). However, there are some special rules for digital products in the EU that can or even must be applied. Below is a brief overview of the most important cases and rules.

Selling in your own country

To private individuals and businesses

Sales are taxed at the local sales tax rate (e.g. 19% in Germany).

Exception: If you have selected "I am not subject to VAT in my own country" (so-called small business regulation) in your account, no VAT is due on sales. Sales to persons outside your home country are also not subject to VAT unless you participate in the OSS procedure (what is OSS?).

Sales within the EU (outside home country)

To private individuals

Sales to individuals in another EU country are taxed at the rate of the buyer's home country. This system is known as the OSS scheme ( what is OSS?).

Through this system, the sales tax on purchases varies from 17% to 27%.

Important: The taxation of sales based on the OSS procedure is mandatory from an annual net turnover of €10,000 with private individuals from other EU countries. Below this threshold, it's voluntarily. If one is not participating in the OSS procedure, the VAT rate of the seller's home country is used.

Invoices issued under the OSS procedure include the following statement:

"VAT rate of the country of the recipient of the service (OSS procedure)".

To Businesses

For sales to businesses within the EU, the recipient of the service (buyer) is the tax debtor. This is called the reverse-charge procedure. In summary, this means that for sales to other businesses within the EU, no VAT is charged.

To ensure that only businesses take advantage of this right, the VAT ID must be provided at the time of purchase. This ID is automatically checked and verified by us against a European database.

Invoices will include the following note:

"Reverse charge procedure: Tax liability of the recipient of the service."

Sales outside the EU

To private individuals and businesses

Purchases from individuals and businesses outside the EU are not subject to VAT. Sales tax is not applicable (0%).

Invoices will include the following note:

"No sales tax, as recipient of services outside the EU".

How is VAT shown on invoices?

All invoices include a full list of gross and net amounts, including the necessary notes on why and how much VAT has been charged.

What do invoices look like?

How do I know how much VAT has been paid?

At the end of each month, you will find a new sales summary in your account. This is a summary of all your sales (including taxes).