Can anyone tell me if Shopify is planning for the new VAT rules on digital goods which start from 1st January?
Currently we charge VAT at the supplier's rate. So, as I am based in the UK, anyone in the EC who buys a digital download from me pays 20% VAT, regardless of what VAT is in their country.
From 1st January we will have to charge VAT at the buyer's rate. So I will have to enter a VAT rate for each of 28 EU countries and monitor them consistently in case there are any changes. Or - in an ideal world - Shopify would make this happen automatically!
Once every quarter a new VAT report - called VAT MOSS - will have to be submitted, and all the VAT collected for each of the 28 EU countries, accounted for individually.
It's a nightmare.
It would help if the EU would publish their member country VAT rates in some decent computer readable format, rather than silly tables in pdf documents. If anyone comes across such a thing then please let us know.
Tax treatment in Shopify appears to be poorly thought-out, with no recognition that territories can have multiple tax codes, and that tax codes have different rates that vary as-of particular dates, and that different product types are subject to different tax codes in different countries. Not replying on these issues is not encouraging either, as it's impossible to have confidence in a company that does not acknowledge customer issues.
At the moment we're in the try-before-you-buy stage, and cannot get different variants taxed at different rates in different territories.
This is going to effect everyone that sells digital downloads to anyone in the EU, not just EU Shopify uses. We are expected to obtain and to keep in your records 2 pieces of non-contradictory evidence which can be IP address and billing address. Can we use the reports to show customers IP addresses or not at the moment, I've looked but can't see it.
How Shopify handles VAT is poor and this really needs to be address. Currently as it stands will Shopify allow me to charge different rates of VAT to my customers?
An answer from Shopify would be good here and then we can all put our minds to rest before January 1st.
Note that Italy and Malta just announced reductions as of 2015-01-01 in their digital book VAT rates to 4% and 5% respectively.
Unfortunately there is no way of setting this up in Shopify that I can find, so someone will have to be poised over the keyboard to make those changes on New Years Eve :(
Thanks for the posts - this is something we're aware of, and will have more information we can share and a definite answer in the future. I don't have a specific timeframe I'm able to share, but I do understand the concern.
As for setting specific tax regions, you can set an override to apply to a collection - in this case, you could set the tax rate for Malta, and set an override on a hidden collection, so your customer isn't seeing the additional specific tax rate collections. Here's a guide!
Hope this helps,
So now this has been published, but it still leaves questions unanswered:
If I understand the article correctly, this new digital goods EU VAT rate setting requires my prices to include VAT. This poses two problems:
1) I can only set one VAT-inclusive price, no matter what VAT rate gets applied at checkout, when the customer enters his info.
2) Showing two prices in my store as detailed here isn't possible anymore because that solution requires prices to not include VAT.
What makes this solution more or less unworkable, though, is that I can only assign products to the Digital Goods VAT Tax collection, not variants. Typically, for a store selling, say, music albums in both physical (vinyl/CD) and digital (mp3) formats, there will be a single product for the album and the different formats will be variants. But with this solution I'd have to create separate products for the digital versions, which would clutter the store and make product management a lot more cumbersome.
Maybe I'm misunderstanding how this is supposed to work. Maybe someone could clarify?
Would it be possible to get a response to Tom's questions below as a priority please?
We work in the music industry and use the AudioSalad platform (API) to automatically create 3 variants of a Collection covering a music release. 1. Vinyl 2. CD and 3. Digital Download. Only being able to apply your Digital Goods VAT Tax to a Collection does not work for us as the rates are not applicable to the Vinyl and CD variants. We need an appropriate solution for our business needs.
What is your feedback and solution please?