New Tax Configuration for EU - What you need to know

[FredBart]

Hi Donohue,

Do you have any information on when this bug will be resolved? We have the same issue.

Best

Fred

[MrPorter]

Can you please make a simple check box in the tax section which, being having it checked, permits to collect VAT only for customers which are located in the same country of the shop?

I think this influences the customer behaviours, the customers say more expensive prices, which causes less sales for the shops and by consequence less transaction fees for you.

[carlomat]

Actually this change was very problematic for our store. If you are selling within the EU there is the so called " Threshold for application of the special scheme for distance selling" (please check the documents I attached). These are official EU guidelines. For Austria you have a tax exemption limit of 35.000€ which we haven't exceeded by now. That's the reason why we didn't charge VAT for customers from Austria by now. With the new tax system @Shopify introduced shortly the customers get charged VAT. 

• https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/traders/...
• https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32006L0112&from=EN

@MrPorter is absolutely correct. This influences customers behaviours a lot.

[Donohue]

 Hi @FredBart , please be more specific about the bug that you see.

[Donohue]

Hi @MrPorter - are you selling primarily to B2B customers? 

If you are selling to B2B customers, you could think about using our customer exemptions feature. It doesn't properly determine between home VAT country or not, so it blanket exempts everyone but in the coming months we are looking to get feedback around EU VAT B2B functionality - watch for the post.

[Donohue]

Hi @carlomat, thank you for your feedback. 

If you're selling primarily to B2C customers (non-VAT registered persons), you should be applying your local VAT to all sales in the EU until you reach the distance threshold for the destination country. After this time, you register with the destination country and then apply that country's VAT rate on your sales within the destination country. Please see the resource I posted in the original post.

If you're selling primarily to B2B customers, I can see how our setup may be confusion. You could use our customer exemption functionality if you want to exempt specific VAT-registered persons from VAT. 

If you have documentation to the contrary, feel free to post it - but we made this change so that merchants would be correctly sourcing and applying B2C VAT on their sales. If we gain enough feedback from the B2B selling community we will investigate further changes.

[MrPorter]

Hello Donohue, 

we are only selling B2B. 

The solution suggested by you is not enough, we are currently excluding the customers manually as described by your solution but this requires additional daily work. In addition to that, it does not help when a new customer register an account and then try to finalise a purchase. We noticed a lot of abandonment of new customers because of this 20% more.

We tried also to change the % of VAT to set to 0 because we sell more abroad than in our country but is not possible to make this change.

[FredBart]

Hi Donohue, I am referring to this post below. You are writing that it is a bug on your side. When will this bug be fixed?

***

09-18-2020 10:33 AM - Donohue

Shopify Staff - 61 1 8

Hey there,

This is a bug on our part. We've automated shipping taxability based on the
taxability of the items on an order, but haven't fully deprecated that
button.

***

To explain you: Our products (shoes) are taxed 16% in Germany because of Covid-19 (usually 19%). So shipping has to be taxed the same. But if we ship 100 flyers for free to a customer, shipping does not get taxed by Shopify. However, under German law, we have to tax shipping with the same rate as our products which are mainly shoes. With the new settings, shipping does not get taxed if we ship goods for free and this creates a problem for us.

Can you put the setting back so that shipping always gets taxed the same rate no matter how many products are shipped and what prices we charge for these products?

Best

Fred

[FredBart]

Hey there,

This is a bug on our part. We've automated shipping taxability based on the
taxability of the items on an order, but haven't fully deprecated that
button.

[FredBart]

***

[FredBart]

To explain you: Our products (shoes) are taxed 16% in Germany because of Covid-19 (usually 19%). So shipping has to be taxed the same. But if we ship 100 flyers for free to a customer, shipping does not get taxed by Shopify. However, under German law, we have to tax shipping with the same rate as our products which are mainly shoes. With the new settings, shipping does not get taxed if we ship goods for free and this creates a problem for us.

[FredBart]

Can you put the setting back so that shipping always gets taxed the same rate no matter how many products are shipped and what prices we charge for these products?

[FredBart]

Best

[FredBart]

Fred

[Donohue]

Hi @MrPorter do you mind DMing me? I'd love to collect this feedback and learn a bit more about your situation 

@FredBart can you DM me? I want to understand a bit more about the bug, I have some questions. 

[MrPorter]

Can anyone tell me if you managed to use the following feature?

I tried to create a collection with Collection Type = Automatic with condition price >0€ but this collection is not shown in the list.

I hope someone of the support shows up and finally reply to my emails