Drop Shipping and Taxes Overseas

[Nicole_Shaw]

Hello My name is Nikki,

                                     I have a question and i am hoping someone can help me out.I just Set up my first shopify store for dropshipping ,but i have hit a road block ''Taxes'' .My family member is in the Armed Forces so we move around europe and state side alot ,and my address is as Country united states but it is listed  FPO AP .So what type of Taxes could i list down or should i not put taxes down since i am dropshipping ?

[Leon]

Hey, Nikki.

Leon here from the Shopify Support team.

While you should check with an accountant familiar with your situation for confirmation, I hope to provide some direction with what I have been able to find online. It looks like it largely depends on two factors for your situation - Your state of domicile, and Nexus. 

While living overseas and moving around with the military, you should still have a "state of domicile", or "state of legal residence" while you move with military orders. This may be where you file your personal income taxes - and is most likely where you should be collecting and filing sales tax for your business. We have put together a Shopify blog post about this subject which explains in greater detail how to determine where to collect taxes: https://www.shopify.ca/blog/16480780-should-you-be-charging-sales-tax-on-your-online-store?utm_mediu...

Another factor that will change how you collect sales tax, is whether your business has "Nexus" or operations in another state. Many businesses are required to collect taxes in more than one state due to having a warehouse, sales staff, or other factors that the state considers to be significant enough for sales tax to apply. You can read more on this concept in the blog post I linked above, and in this blog post: https://blog.taxjar.com/charging-sales-tax-rates/. 

As you can see, taxes, as they relate to your specific situation, are not clear cut. I highly recommend you speak with a tax professional to determine the state in which you are required to collect taxes. TaxJar has a great list of qualified firms you can contact if you do not have an accountant already. 

I hope this helps provide some direction. All the best, Nikki! 

Leon