As an EU VAT registered company, we are required by tax law to pay VAT on all pledges from EU residents.
For instance: from the $119 pledge, we need to pay VAT at 22% rate or $21,50 leaving us with only $97,50 (minus Kickstarter fees).
Since Kickstarter has no way of handling VAT (it is not even mentioned on the tax related support pages), we decided the best solution is:
we will pay half the VAT and the backer will pay half. Since the only location-dependent charge is the postage, we have "hidden" the VAT charge there. Again, for the $119 pledge:
postage is $20 for EU and $10 for the rest of the world. The EU postage includes $10 VAT surcharge (we still need to cover the $11,50 remainder of VAT).