How not to charge VAT to non European and USA - Please help!

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Explorer
43 0 37
I am one of the original complainants on this forum, having raised it with Shopify over 6 years ago. It may be worth, however, raising a potential workaround that I’m pursuing. This applies only to UK retailers worried about the problems involved in charging VAT to EU customers who will also have to pay VAT on import to the EU.

A number of the larger carriers offer a “VAT & DUTY paid” service on international parcels. That is, arrangements can be made that the carrier clears the parcel on entry to the EU, but rather than the customs charges (mainly VAT, possibly also duty) being charged to the recipient, they are charged back to the sender. If an e-commerce retailer took advantage of this facility, an EU customer would receive the parcel without having to worry about customs charges - exactly as at present when the UK is treated as within the EU single market and VAT system. The retailer will obviously need to cover these charges, but these will be mainly VAT charged at the rate of the receiving country. On the other hand, the retailer will have charged 20% UK VAT that will not be payable to HMRC for an EU shipment, and this will broadly balance the VAT payable as part of the customs charges, since EU VAT rates are generally around the 20% mark - some a bit below, some a bit above.

None of this takes away from the pathetic stance of Shopify in refusing to recognise the major flaw in their tax system, but it DOES potentially provide a way around the problem for UK retailers, and one that will also reduce the extent to which EU customers are put off by having to deal with customs clearance and unknown levels of charges.


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Shopify Partner
10 0 4

Hi @Aria.

As @Royde says, it doesn't sound like a solution is going to be forthcoming and with this having been an issue flagged up 6 years ago I'm not hopefully. So the workaround we are looking at is migrating our store to a different platform I'm afraid. Looks like it will also allow us to address a few other short-comings that we have never been able to satisfactorily sort out in shopify too.

 

 

 

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Shopify Partner
10 0 4

@Dan_Bernard  - thanks for posting this suggestion. It was something that had crossed my mind and if doing that I would probably want to look at building the VAT discrepancies into individual country shipping rates. Will this lead to much extra admin for you? Probably won't go down this route ourselves but good luck with it though!

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Excursionist
13 0 7

I think I might have to spend the 2 days to switch to woocommerce which I rate. I only have 20 products to cut and paste the content. All the graphics will port across thanks to responsive design these days. So vendor lock in is less of a thing.

I made a mistake of staying with a system before because of the effort involved to switch I won't stay with a backward system no matter if they got so much right. Tax setting is a fundamental for me. If there was a plugin that wasn't too much I would consider that.

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Tourist
4 0 3

Something that I'm doing myself (which might benefit others on here) is basically using shopify as an ordering facility, checking prices and checking stock. So my customer logs in, checks price, availability and places an order. I have an app that lets my customer order without going through the payment process , the order comes through to me and I invoice it through software that I use separately to control stock etc......... I send them the invoice and they do a bank transfer/card payment or some have payment terms.

So all my prices are ex vat, my domestic customers know that my prices are ex vat and my export customers are still seeing prices without vat as well.

Not ideal I know but it's works for me - it might be an idea for others............... Just to add that my business is a B2B and all my customers have to be approved first before ordering it gives me more control of whats happening on the site so that's why it probably works for me.

If anyone has any questions let me know 

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Tourist
5 0 3

The UK leaving EU's free trade zone is getting closer every day. The importance of this feature request cannot be stressed enough, it's neck-breaking to many vendors.

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Shopify Partner
6 0 0

@Dan_Bernard have you or someone you know actually tried implementing this example code on the website? 

inspirian
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Explorer
43 0 37

Hi @inspirian.  What example code are your referring to?

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Shopify Partner
6 0 0
Please disregard my previous question. I followed the link from your
post at
https://community.shopify.com/c/Accounting-Taxes/How-not-to-charge-VAT-to-non-European-and-USA-Pleas...
where I found a script which I realize now is only available to Plus
tier.
inspirian
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Shopify Partner
10 0 4

Over the last couple of days I've become aware of an additional complication due to new EU VAT rules coming in to effect from 1st July 2021 for retail transactions.

From this date sellers outside the EU will need to be registered in the EU for VAT and collect VAT on the sale if under €150 in value. Over €150 then the existing arrangements for selling ex-VAT will apply. This is part of the EU VAT reform which sees a system similar to VAT MOSS on digital goods being applied to physical goods - something that I was aware of but thought would not affect those of us in the UK and others outside of the EU.

More info contained in the overall info on VAT changes here

And also a Q&A 

From what I can tell we would need to register for VAT in an EU country, charge VAT at point of sale on orders under €150 and submit quarterly returns. Presumably over €150 we can decide whether to collect the VAT or sell ex-VAT.

Similarly, the UK are bringing in a system to charge VAT on consignments of value under £135 coming in to the country from 1st January 2021 (info here ), so this is also going to affect merchants in the EU and elsewhere selling to UK customers before the rules change for us here in the UK selling to EU retail customers.

Perhaps others already know about this but somehow I'd missed this. Or am I fundamentally misunderstanding the changes coming? Hadn't seen any discussions covering this in the community forum.

@Aria, please can you confirm if Shopify are aware of these changes and will there be a function to allow stores to set a limit on order value above which VAT is not charged for international sales? Or, seeing as we cannot charge ex-VAT correctly on the platform anyway, could we instead limit online international orders to be capped at €150? If a store's pricing is in £sterling how would it handle the exchange rate?

If there is the usual lack of interest from Shopify on this then it will only enhance our efforts in looking at alternative platforms that provide better functionality and flexibility.

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