Even before #VATMOSS we needed to distinguish these cases to apply VAT correctly:

1) sales to Germany (where we’re based, and apply VAT)
2) sales to consumers in EU countries (and apply VAT)
3) sales to businesses in EU countries (and require a VAT ID, apply NO VAT)
4) sales to countries not in the EU (and apply NO VAT)

And then be able to proof to the tax authorities that we picked the right category for every purchase. At least that’s my personal understanding/interpretation of VAT law even prior to #VATMOSS.

We achieved this by:
1) requiring customers to enter their address
2) requiring the method of payment to match the country supplied with the address:
– So that f.ex. someone couldn’t enter his (valid) German address, but pick Switzerland as country to work around paying VAT. In which case we’d still be liable for paying VAT.
– You really want to do this to prevent fraudulent purchases with stolen identities, anyway. Enforcing this rule on credit card payments brought down our chargeback rate to 0.

In over 10 years, the share of people where address and method of payment didn’t match was way below 1% – and caught mostly people who wanted to avoid paying VAT (possibly illegally, and at our expense). So, if our experience is any indicator, this is not something to worry about too much. (I’ve linked our store – which should not need any changes to its design to comply with #VATMOSS – for this blog post. I’ve invested months to make it as simple and customer friendly as possible.)

What really worries me is:
– how to keep track of VAT rates (the best resource I’ve found so far is http://www.vatlive.com/vat-rates/european-vat-rates/eu-vat-rates/ which lists VAT rates for 2015 – and should also list upcoming changes)

– different requirements towards the design of an invoice – or whether an invoice is even needs to be issued (https://twitter.com/felix_schwarz/status/540828113249517568)

– the complete lack of dependable resources. The EU Commission sold this as “simplification” and “leveling the playing field” – both of which strike me as wrong. If they wanted to make things simple and level the playing field, they should have agreed to a small, easy to understand set of rules to apply to these sort of transactions. Instead they now expose every merchant to the VAT laws of 28 countries – and expect them to master them from day 1.