Interestingly, for all those people thinking that physical products gets around this problem ie dvds, cd-rom, usb sticks etc.
It has been stated that this requirement to register for VAT in all EU countries (and US) will be extended to physical product. And, sooner rather than later. The expectation is as soon as 2016.
This has badly affected my business plans but it is clear that I need to understand the situation and plan compliance somehow.
In the meantime, I have blocked all sales to non-UK EU countries and hope that will give me a bit of time to work out what to do about the US.
Exactly, how does one selling through PayPal, automatically calculate sales-tax for the individual US states?