Should you charge VAT ? To whom ?

I just can't believe it: I just bought some software from an ISV that uses Digital River as their e-commerce provider. It appears that Digital River doesn't get it right about whether they should charge VAT to me. What p... me off is that they charged me 17.5% VAT even though they shouldn't have to. Not such a big deal: I'll put it on my 3-monthly VAT declaration, which appears to be filled in early April. But still: It's like I lent them the money. Wait! Maybe this is the reason: They just want to make my money work for them for a few days or weeks and then say 'Oops! Sorry, our bad, here's the money back'. Giving the amount of business they do, I guess the profit might be interesting EVEN THOUGH ILLEGAL.

Come on! Even a moron like me (at least as far as accounting is concerned ;-) knows the rule:

You should charge VAT if:

1. You:
You are a registered EU company or individual, hence you have a VAT id (or whatever it's called in your country). If you are not located in the EU, you never charge VAT. If you are in EU but are not registered, you most likely don't sell anything on a professional base (or you are in a special field of activity (such as insurance) and I have no idea what kind of taxes you should or should not charge).

AND

2. Your client is either:
a) a non-registered EU individual or company (someone who doesn't have a VAT id. Typically a consumer, as opposed to a professional user). Note: Most EU companies do have a VAT id. There are some exceptions to the rule though such as government agencies, bankers and insurance agents (at least it's the case in Belgium).
or
b) any individual or company residing in your own country.

What rate should you charge ?

The rate in use in your own country.
e.g.: rate for software goods in Belgium = 21%

How do you know for sure your foreign EU client is a registered entity ?

That one is easy: They MUST give you their VAT id during the sales process.

BTW, Digital River never asked me for my VAT id during the purchase process! Other sites (such as ShareIt, which I use for appTranslator sales) do it and handle VAT the right way.

An example

Let's see who pays VAT when purchasing appTranslator.

1. You are American. Or Korean. Or Japanese. Or Canadian. Or Australian. I won't charge you VAT since you (or your company) is not located in the EU.

2. You work for a German company. I won't charge you VAT since you give me theVAT id of your company (assuming the company pays for the software) during the purchase process.

3. You are an Italian professional developer or translator. I won't charge you VAT since you give me your VAT id during the purchase process.

4. You are a French hobbyist developer. Sorry, you'll be charged 21% VAT.

5. You work in a Belgian company. You'll be charged 21% VAT (because my company is based in Belgium too). Of course, since you have a VAT id, you'll get the money back from the Belgian government when you declare the purchase on your VAT form.

You see, it's not that complicated. Which leads back to the question I asked earlier: What's the reason that leads Digital River to do it the wrong way ? I bet it's one they are not willing to confess...