My store is based in Canada but i am giving consultancy services for international customers. When i receive an order from Canada, the sales tax is calculated automatically, but when i receive an order from ,for example from European countries or US, my store does not charge sales tax, is it normal? Cause according to Canada international sales rules, all orders should be charged sales tax no matter the customer resides in Canada or not. Is there anywhere that i can define that all orders should be charged sales tax no matter where the order coming from?
Thank you so much
From reading your post it sound like you sell services from Canada. Are you selling services to company clients (B2B) or private people?
Here are my general comments*:
If you sell services business to business from the US to an EU company, generally no VAT is necessary. A North America company does not need to charge VAT to company customer if they can confirm that they are VAT registered within the EU.
Please note that the rules change if you decide to start to sell to private people and if you also start to sell products. What are you selling and who are your customers?
If you want you can google the company I work for "Euro VAT Refund. Inc." in Los Angeles and click on our website and you can find our email address and my direct phone number. Feel free to email or call and we are happy to explain more.
(*Please note that this is our very general answer with the limited information we have and cannot be considered formal advice.)
Thank you so much for your reply. We sell online personal styling and shopping service to our customers as well as designer outfits and accessories. We have individual customers from all over the world. We realized that if they are outside of Canada, they are not charged tax, but if they buy from inside. they pay sales tax. Is there any option to choose so that all customers would pay the same tax as Canadians? We have Shopify basic app, would that be the reason since it does not support international sales? Thanks
So it sounds like you sell "fashion consulting" services and sometimes products "clothes accessories etc.
The general rules for services and for products sold to private people in Europe are different:
You are required to register for a VAT number in one of the EU countries if you sell online services to private people. Once you are registered you charge VAT according to each country's VAT rate where your private customers are located. You cannot charge the Canadian rate
For products please note the rules are different for the UK and for rest of Europe. UK is now outside of EU (Brexit) and if your sale is below 135 GBP you need to charge VAT and register for VAT in the UK. Sales above 135 GBP you may make the customer the importer.
In Europe the rules for product sales to private people will change in July this year (2021). Until July you may sell products to private people making sure they are the "importer of record". Very important. That way they will take care of paying VAT and duty when your product clears customs. After July you will need to register in one EU country if your sales are below 150 Euro.
Normally you may not charge Canadian tax to private people outside Canada. Also you generally may not start charging and collecting VAT payments from customers without being registered for VAT correctly otherwise you will get in trouble with tax authorities in each country. (image if a foreign company would suddenly start collecting Canadian taxes from people in Canada with being established properly).
*All of the above is just my general comments and cannot be considered formal advice since I don't know all the details about your business and customers. Sorry if my email sound complicated but there are so many VAT rules and I am just the VAT messenger trying to give you some guidelines.
Also, we just recently recorded a free webinar about taxes when selling products online.
I can't post the link here it doesn't work... But if you google "Euro VAT Refund, Inc. in Los Angeles" and click on our website you'll find us. On the homepage in the middle under "latest news" there is a webinar. Fill in your name and email and it takes you to a free recording with tons of Powerpoint slides. Hope you find it helpful!
Email me after you watch it and let me know if you have any additional questions.
Thank you, Bianca