Since the implementation of OSS in the EU today, we are having issues with how our end prices are being calculated in our online shop. Our tax settings are:
The issue right now is that the end price changes depending on the charged VAT rate. We are registered in Germany with 19% VAT. If we sell to another EU country now, the end price changes instead of adjusting the VAT amount to the sale price (a EU sale of eg. €99 should always be €99, regardless of 19% VAT or 20% VAT or 25% VAT, only the VAT part of the total price would increase if the rate is higher than our 19%). So if we have a french customer right now (France has 20% VAT rate), he/she pays slightly more than our German customers. Has anyone else experienced this issue, and if so, did you manage to properly solve this? We have contacted Shopify support, and they couldn't help us and said our tax settings are correct.
Hopeful for a resolution as having a different end price than listing price is illegal in the EU.
So, I have managed to figure out what how the price is calculated. Please forward this information to the developers asap.
Here is an example:
Regular price €99. Sale price €69,30. This it how it should be, and how it’s displayed in the shop. But when a customer from another EU country with another VAT rate wants to buy this, Shopify calculates the price like this:
99 - 19% German VAT = 83,19
83,19 is then used to calculate the sale price without VAT, in this case 83,19 * 0,7 = 58,24.
Then French VAT is added the price instead, like this:
58,24 + 20% French VAT = 69,89
So on the sale (excluding shipping), VAT of 11,65 has been charged to the customer, but the correct VAT charged to the customer should be 20% of 69,30, which equals 11,55.
So the issue with the incorrect prices are due to how Shopify calculates the prices. I tried with a regular priced item as well, and same applies:
Price in the shop = 189 This is what German customers pays, and what everyone in the EU should pay (shipping excluded). However same thing happens, again the French example:
189 - 19% = 158,82
158,82 + 20% = 190,59
We have the same issue...
If you untick the second tax settings, it will be correct the pricing and taxes in EU... BUT in that case tax free shopping is not working outside EU. ( USA , CAnada etc) it will still charge them full price and not your Price-VAT.
It seems like its either or currently... I tried to talk to the Shopify support and they seem to not understand the issue still.
I am looking into third party apps now, like Exemptify, to might resolve the issue.
Yes, we have done this as well as we need to comply with EU laws, but our international sales are currently taking a big hit. I agree that it has been really hard explaining to Shopify to even explain the issue, I’ve gotten replies from 3 different support employees and they seem to (at least at first) think that it’s working as it should. If you have any luck with an app, please let us know.
Also @Shopify, how can you mess this up like this and then be so slow reacting? your merchants are loosing money by the minute and you don’t react. I raised this issue on the by 1st, and no solution seems to be in sight. We have a lot of non eu customers and are very upset with your ineptitude. It took you years finding a proper solution to even remove VAT for non EU customers, and now you are at it again… it’s very obvious that your tax team doesn’t have the required knowledge about EU taxation (I guess you are all NA based) which is borderline criminal for a shop provider as big as yourselves.
Like you guys, I've spent many hours chatting with Shopify support people about this, and each time they completely misunderstand the issue we are reporting and tell us the system is operating correctly in respect of prices.
For us there are THREE CRITICAL problems here.
Firstly as @Robin_K correctly pointed out, charging customers a different end price to the one we advertise / display is NOT LEGAL.
Secondly, Shopify SHOULD NOT BE CHANGING THE END PRICE when calculating different EU tax rates. The end price MUST REMAIN THE SAME - it's the proportion of tax inside that amount that should change.
Thirdly, as @HansenGarments correctly pointed out - turning off the option to Include / Exclude tax on the Tax settings isn't a workable solution for EU merchants, because this results in our non EU sales to places such as the US, incorrectly being charged VAT.
Actually I'll add a fourth issue here - the decision on an end price for a product online is a critically important decision and tool - it's not only confusing, illegal and wrong - it's also interfering with one of the most important strategic tools for an online merchant - pricing.
If it's an issue for us, it will be an issue for other EU merchants - so let's hope they see this thread and we can get a solution soon.
@Jonathan_Maher @HansenGarments That Shopify are useless when it comes to EU VAT handling is unfortunately old news.. I'm currently traveling Italy with limited time on my laptop, would any of your guys care to dig up a bunch of Shopify staff on here and post as a reply to this? I would then write them individually.
Does anyone has some new info about this? The only thing we hear from Shopify is that this is taken under consideration, but they cannot say neither if they intend to fix this or when it could actually be fixed. The recommended us to hire an expert to customise the coding, ignoring to mention that to change the checkout coding, we need to have a Shopify Plus membership which starts at several thousand € / month. We are looking at some multiple pricing apps and for us thus far, the most promising for us seems to be "Pricing by Country" from Webrex Studio which we will try today. Anyone else has a better tip or more info, feel free to share.