Gift Cards and new EU VAT regulations

Shopify Partner
3 0 0

Hi there,

thanks @Teoalessi for sharing this issue with the community.

 

We do confirm this is a mandatory request for all the EU based marchant: gift card must be vat included when sold.

 

Please check below the actual Shopify behaviour:

 

Schermata 2019-10-16 alle 12.01.14.png

 

Unfortunately this actual Shopify limit turns the gift card "illegal" in EU because all merchants selling gift card without VAT could be accused of tax evasion.

 

IMHO having the "charge taxes" option available on gift card product as well will solve all. At the moment, trying to do this, the Shopify feedback (after flagging charge taxes and save) is the following error...

 

 

Senza nome.jpg

 

 

This issue is even more relevant in cases in which the merchant is selling phisical goods (I think 90% of the EU Shopify stores), because at the moment of the sale of the gift card the merchant know it will be used only on our store and only for products that are subject to 22% VAT.

 

@VictorCould you please let us know how to proceed in order to have this feature request added in the Shopify tech roadmap asap? Otherwise potentially all the EU Shopify store selling phisical goods will be forced to stop selling gift card (loosing money expecially during the Christmas period).

 

Looking forward to hearing you soon

 

Thanks

 

Giacomo

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Shopify Staff
Shopify Staff
221 26 55

 

Hi @Giacomo143,

 

Thank you for providing more context on this issue. I have flagged this with our technical team here and they have asked me to submit this to them for a full review. I will be doing that and they'll take a look at this in more detail.

 

Kind regards,

 

Victor | Shopify Social Care

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New Member
1 0 0

I have just setup gift cards and have the exact problem described above. Until resolved I would have to do a manual VAT report on gift cards and counter it against the VAT calculated at the actual sale  :-(

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Shopify Partner
3 0 0

Hi there,

yes, @theprince you are right. I've been in touch with a Shopify Guru asking me all the info about this new regulation.

 

After sharing all the info (providing detailed informations from several trusted source - uk governement for ex), unfortunately the Shopify feedback received by mail was this:

 

Ella Bamba (Shopify)

Oct 25, 17:01 EDT

Hello Victor,

This is Ella, one of the Gurus here in Shopify. I am helping Gavin with some emails today! :)

Thank you so much for reaching us out regarding the gift card tax. I know how important it is for you. Since you have me, let's work through it together! :)

I can definitely understand where you're coming from, I would absolutely feel the same if I'll experience this. We definitely have no intention of making anyone(that includes you!) feel that we're leaving you guys alone in the dark. We always want to make sure that everyone using our platform and/or services feel safe, comfortable, at ease, and happy! Rest assured that we are, and will always be, continuously improving and developing our platform.

|Shopify Help Center :: Frequently asked questions about gift cards|

Since this is something that isn't available with our platform yet, as promised by my other co-guru, he raised this concern up already with our developer. Although there's no guarantee of an approval and when will it be rolled out in the future updates, but I have high hopes for this! :)

Alternatively, you may refer to this helpful document to know more on how gift card works in Shopify.

Since this is something that isn't available with our platform yet, as promised by my other co-guru, he raised this concern up already with our developer. Although there's no guarantee of an approval and when will it be rolled out in the future updates, but I have high hopes for this! :)

You can keep an eye on our Shopify News page to keep updated for the latest news about our platform.
That's about it from me for now! Furthermore, please know that my help doesn't end here so let me know if you have additional concerns or need further assistance and I'd be glad to lend a helping hand. :)

If you have further questions or clarifications, please do not hesitate to let me know in this email. However, I want to inform you that I'll be gone for my day-off, so you may not get a reply from me immediately. I will be back on Monday. If you would like to speak to us more, you may contact us on our live channels via Chat or Phone.

Regards,

Ella
Guru | Shopify

 

So, basicallty this is another example on how Shopify does not take care of European Merchants...As all of you can see this is a very standard feedback (including copy and paste error - same quote 2 times).

 

That said, at the moment we have to manage VAT report manually and outside Shopify. Moreover whan we sell a gift card, for Shopify this doesn't generate sales, so the reporting is affected as well of thi general "gift issue".

 

As Shopify partner, this issue is generating a lot of issue to all my clients. IMHO it's absurd that Shopify offers QR code, Apple wallet integration and so on for gift card, but they do not take care of the most important point: to be compliant with the legislation of the country in witch they sell the Shopify platform.

I think all the EU merchants are able to list all the missing features we are still waiting for, this forum is full of requests that are still pending , some of them since 2 years :-)

 

Naming a few of them: codice fiscale request at checkout (mandatory in Italy), invoice request fields (available only for Plus merchant forced to customize by themself the checkout and working around using metafiled, order notes, etc), recovery cart mail that does not check the stock availability before send the mail (very very disappointing), etc.

 

I think Shopify should fix at least all the mandatory features before spending a lot of time and effort promoting their product in the EU area, simply because the product is still not 100% compliant to the legislation.

 

I'm still believing Shopify is one of the best product in the market today, but honestly I'm loosing hope of having some of this features. We do need to help each other sharing workaround waiting for them to help us in order to have what we are paying for.

 

Please keep sharing the knowloedge waiting for Shopify.

 

GA

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New Member
2 0 0

Just bumping this, as I have just added gift cards as an option on my store in the UK.

 

Has anyone made any headway on this or had any advce on how to deal with the double VAT issue in the EU?

 

Thanks

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Highlighted
New Member
2 0 0

Hi Victor,

What is the update on this please, at some point this is going to be a rod for your own backs, does it really need to come to that before we see a change here?

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Shopify Staff
Shopify Staff
221 26 55

Hi @Stefan_VR,

 

Thank you for getting in touch. This is something our internal team have been made aware of and have investigated as a number of merchants based in the EU have contacted us in recent months with concerns about this issue. However, having reviewed this new legislation, we believe gift cards sold and redeemed via Shopify are deemed multi-purpose vouchers and as such VAT does not need to be charged at the point of purchase.

 

Gift cards sold by merchants on Shopify can be used for any item on a merchant's store, as they are simply a payment method, and can therefore be deemed multi-purpose vouchers. A single-purpose voucher would be a gift card/ voucher where the place of supply of the goods or services to which the voucher relates, and the VAT due on those goods or services, are known at the time of the issue of the voucher.

Any merchant that is selling gift cards online will not be able to determine the tax rate that should be charged at the time the gift card is purchased because:

  • it can be used to purchase any product/service
  • the final shipping address could be different than the original billing address


Gift cards sold via the Shopify platform are not designed to be redeemed for a single product/service, so even if the merchant is retail only, there wouldn't be a way to identify that particular gift card is for that particular product/service.

 

Kind regards,

 

Victor | Shopify Social Care

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New Member
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Hi Victor,

I'm afraid you are mistaken.

 

I'll simplify this, if your store sells the voucher, and the voucher can only be used at your store (The store that sold the voucher) and your rate of tax is known on the products you sell as is the case for 99% of merchants (In the UK it's 20%), then you are selling a single use voucher.

 

There should be no confusion with the fact that it is called single use, this refers more to the single location / single tax rate than buying multiple products with one voucher. Confusing AF I know. Regardless, HMRC here in the UK has made it quite clear that we now need to pay the VAT on vouchers sold, please see below.

 

"From 2019, a voucher will be regarded as a Single Purpose voucher where the place of supply of the ultimate goods or services is known (That's your store) at the time the voucher is issued and where the voucher can only be used for goods/services (More than one type of goods can be purchased and still be single use) at a single rate of VAT (All our products are VAT rated at 20%)."

 

 

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Shopify Partner
3 0 0

Hi @Victor,

yes, you are wrong.

 

It seems your are interpreting the regulation in "your way", but it's not the real one.

 

If all the EU merchants start selling gift cards (because your feedback confirms the Shopify gift card are OK for the EU law), will Shopify take care of any kind of fine we are potentially going to receive? I honestly don't think so...

 

So, please fix this gift card issue or ask a good lawyer to double-check the law, your feedback is totally wrong.

 

 

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Shopify Staff
Shopify Staff
221 26 55

Hi @Giacomo143 & @Stefan_VR,

 

Thank you to both of you for providing your feedback on this issue and for the detail you've given. I have gone ahead and communicated your comments onto the relevant internal teams for their consideration. I will be sure to update this thread in future once I hear more.

 

Kind regards,

 

Victor | Shopify Social Care

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