How do I handle international taxes as a US-based dropshipper?

[Jdannenberg]

I am a US-based Dropshipper and am registered with the state I am physically in. I am a little bit confused on what I need to set up if I dropship to other countries. Are there certain countries where my customers will get charged with an unexpected import tax? Do I need to register for VAT for European countries? I'm just a bit lost here and all the guides I have read aren't quite what I am looking for. I'm just looking for a guide on what I have to setup in the taxes page on Shopify in order to sell internationally, and countries to avoid selling if their import and tax laws are too complicated. If somebody could point me in the right direction here that would be awesome!

[Moira]

Hey @Jdannenberg,

Great question!

As a US-based dropshipper, if you plan to sell internationally, there are a few things you need to consider in terms of taxes and import laws. Here are some general guidelines to help you get started:

• Research the import laws of the countries you plan to sell to: Each country has its own set of import laws, which can vary widely. Some countries may charge import taxes or require specific documentation for certain types of products. It's important to research the laws of each country you plan to sell to in order to avoid any unexpected charges or issues.
• Consider registering for VAT in European countries: If you plan to sell to customers in the European Union (EU), you may need to register for Value Added Tax (VAT) in those countries. VAT is a type of consumption tax that is added to the price of goods and services. The rules for VAT vary by country, so it's important to research the requirements for each country you plan to sell to.
• Set up tax rates in Shopify: In order to charge the correct taxes for each country, you'll need to set up tax rates in Shopify. You can set up tax rates based on the location of your business and the location of your customers. We have a guide on how to set up tax rates here.
• Consider using a third-party app for taxes: If you sell to multiple countries or find tax laws too complicated to manage, you may want to consider using a third-party app to manage your taxes. There are several apps available on the Shopify App Store that can help with tax calculations and compliance.
• Avoid selling to countries with complicated import laws: Some countries may have particularly complicated import laws, making it difficult or costly to sell to customers there. It's important to research the import laws of each country and avoid selling to countries where the laws are too complicated to manage.

It's important to keep in mind that tax laws and import laws can change frequently and vary by country. It's always a good idea to stay up-to-date on the latest requirements and regulations to ensure compliance with the laws of each country you sell to.