Hello, I'm starting a POD business, everything's running smoothly except for TAXES, some general guidance would be much appreciated!
My store is Canadian Based (sole owner for now, no company) , and I'm supposed to sell to European customers. I work with Printful as a fulfillment company.
Let's assume I'm selling a T-Shirt
This leaves me with a ridiculous 5€ Margin, and since my prices includes tax, does that mean I still owe that 5€ to the EU?!!
I don't want to charge additional stuff at checkout(shipping and taxes: unattractive), but if I did, would that be canadian tax or EU tax?!
What about paying revenue taxes to Canadian government ???
It's really confusing and really discouraging to the point I'm almost willing to give up, I would really appreciate some help
I know only a professional can give me accurate information, but I'd be nice to at least have an idea from you guys.
Thank you, looking forward to your replies.
Nick here from Shopify.
Really great question. Taxes are difficult to figure out even on the best of days.
The first thing I would suggest to anyone is as you said to speak to a professional accountant or your local tax office. I cannot stress this enough for the main reason of taxes are different for every country and even regionally different around the world. In saying that though Shopify does have a helpful guide with all things to do with non-US taxes which you can read here. The most important part I feel which needs to be figured out is whether you need to charge sales tax based on an origin basis or destination basis. This differs for every country and is the reason your best bet is to consult a professional about it directly.
I hope this helps and sheds some more light on this for you. Don't hesitate to ask should you have any other questions about this or anything else.
All the best, Nick
I feel you. Consumption tax are a tricky thing indeed. The general rule is that if you are selling goods to another countries you need to charge sales tax/VAT to the buyer (the buyer's country sale tax/VAT). But bear in mind that the seller (you) collects the sales tax/VAT from the customer and pays some or all of it to the government, you are sort of a tax middleman.
In your case, you have the choice of including EU VAT in the price of your product, or listing it separately at checkout. A good practice is to give a heads-up on the product page that tax will be added later. For example, say that the price is $23 + sales taxes at checkout. The total price would vary depends on which country in the EU you are selling to. E.g. Let's say that you charge VAT 19%, the final price should be $27.37, so you have a marge of $5 and have to submit just the VAT rate to the EU.
Shopify will collect consumption taxes for you, but you must configure your store yourself to do so.
The best option? Automate the whole process using an app such as Quaderno. You will get notified any time you surpass a tax threshold or when a tax rate changes anywhere you sell your products or services. Quaderno also tracks location evidence and any other data you need to be fully compliant everywhere and provides instant tax reports with all the information you need to file your tax returns.
These two articles might help you out to understand better how this VAT mess work:
Hope this helps!