I'm using Printful to dropship a few of my online products. Printful correctly exempts my orders from tax, as a business, while I collect and pay tax from EU customers in accordance with the regulations. I've run into a major problem in that, when an order is placed via my store (based in The Netherlands) by a UK customer, Printful charges UK VAT, which I can't recover. In other words, the UK VAT simply comes out of my profit, which basically leaves none. This can't be right. Can anyone help?
Nick here from Shopify. Good question!
Taxes can be difficult to figure out even at the best of times. I looked into this for you and found that Printful has a help document based around why are you being charged tax where it states that VAT is added on some orders going to the EU, which you can see from the image below:
Without taking a closer look behind the scenes at the order it's hard to troubleshoot your specific case further. It could also be worth reaching out to Printful about his directly which you can do from their live chat function on the Printful website highlighted below:
I would say to reach out to Printful as the best next step to understand why they might have charged a tax on this particular order.
Hope this helps!
All the best, Nick
Apologies for the delay on getting back to you about this.
Would you be able to explain this a little further for me, please? Is it charging a VAT when it shouldn't or is it just charging a different price of VAT for UK customers only?
Could you also let me know how you have your tax settings set up in your Shopify admin too? For example, have you ticked the box to have all tax included in your prices as shown below?
I'm just trying to understand exactly what your situation is to see if there is a workaround we can look into for you. I'm also wondering if the Tax overrides and exemptions could be worthwhile looking into for you. One of the most common tax exemptions is VAT exemptions in the UK. You can find the Shopify help guide for Tax overrides and exemptions here.
Thanks for sticking with this. The issue is not connected to my Shopify settings at all. To clarify:
1. My store is set up to include taxes in my prices, and all EU consumers (non-business) are charged Dutch VAT, 21%, when they place an order in my store. This is all working exactly as it should be. Meanwhile, EU business customers are exempt from VAT, except in The Netherlands, where Dutch VAT is charged by me and then recovered by the business customer via the Dutch tax authorities.
2. Similarly, Printful has my Dutch VAT number, and uses it to zero-rate VAT on my Printful invoices, as an EU business customer that is not based in a country where Printful has tax obligations. This is correct.
3. Now, if I were a UK business, where Printful apparently has tax obligations, they would charge me VAT even as a business customer (the same as I would charge a Dutch business customer, see point 2), and that would be correct. UK businesses can then recover that VAT from the UK authorities, and that's all fine.
4. So here's the problem: Printful is adding UK VAT to invoices billed to my Dutch company, in the event that I request them to fulfill an order to a UK customer. My Shopify customer invoices show Dutch tax on the original order, which I declare and pay. My Printful business invoices show UK tax, billed to me, which I cannot recover, as I am not a UK company. Hence there is something wrong with the way tax is handled by Printful.
To be honest, I don't expect you be able to solve this. But there must be other EU (non-UK) Shopify store owners, using Printful, in exactly the same predicament. How do they manage it??!