Setting up website and want to know what/how to deal with the taxes in US and Europe.
I’m using Printful to dropship a selected range of products from their US and European locations. Printful will charge tax on sales from California and North Carolina, which is great! But what about the remainder of the states:
Do I collect these taxes and then pay them when I’m sent an notice. How does this work?
With regard to Europe, Printful will charge me VAT on purchases. I understand that I will have to collect VAT on sales, but where do I register for this. I’ve tried to get this information locally (Australia) and talked with a couple of accountants, but no such luck.
Any help/advice/or pointing in the right direction will be greatly appreciated
Nick here from Shopify.
Really good questions. Taxes can be tough to master on the best of days.
US Taxes - With regards to your first question on US taxes, you would need to set up the tax rates in advance to sell the products. Shopify has a helpful guide for you with this, going through all the steps to make sure you do it properly. Something else to consider is that recently the United States Supreme Court ruled that states can also require online sellers to collect sales tax based on the economic nexus. For information about how this ruling might affect your business, see the Shopify blog post South Dakota v Wayfair: Economic Nexus, Sales Tax & Ecommerce.
Non-US Taxes - The first thing I would suggest is consulting with a local tax expert on whether or not you actually need to charge tax if you are selling from the US. After doing some digging I discovered to register for VAT in a European country you must have your business registered in that country or state. For example, you can see Ireland and the UK. Shopify also has another helpful guide going into detail on how to set up Non-US taxes for your store.
Hope this helps and clears some questions up for you moving forward.
All the best,