How to calculate VAT on shipping for multiple tax levels in the EU?

[Oscar38]

Basically the problem is the following:

(This questions is applicable in EU)

The ordinary rule of charging VAT on shipping is that the VAT on the shipping fee should be the same as the goods that you sell. 

The issue occurs when selling products on different tax levels i.e. Food (12% VAT) and merchandise (25% VAT) then the VAT should be spilt by the amount of VAT charged for the items in the order. 

So as an example I’m selling food for 100 euros and merchandise for 50 euros within the same order. The total sum is charged 150 euros but the VAT is 12% on 100 euros and 25% on 50 Euros. 

Weighted, this is roughly a 67%/33% split for the total som charged for VAT. And this should then be applied for the tax on shipping, 

If I charge 15 euros for shipping, then 10 euros should be charged with a 12% tax and 5 euros should be charged with 25% tax. 

The problem by law in EU, is that the VAT should be visible on the receipt that the customer receives and should reflect this split between taxes. (12% and 25%)

Has anyone found a way to integrate this function into the platform either by tax overrides or found a third party application that solves this issue? I don't want to spend any manual labor on doing this as it would probably fill my days...

[dyrm]

Any feedback on this? It must be the problem of more than two people living in the EU…

[kaaaaa]

Hey Oscar!

I'm currently working on a shopify app that could solve this issue. However in this first phase I'm currently validating this issue and need your help!
I would love to hear some feedback from you and if I could propose possible solutions to you in a scheduled call (max. 20minutes). Feel free to reach out at cka.29@icloud.com

Cheers

[Oscar38]

Hi,

Yes this is still an issue that Shopify doesn't clearly understand that we need in EU. I guess that this is actually an issue for everyone selling goods within different tax-levels in EU. Should be a substantial sum to save for a company if you get this right instead of overpaying taxes. I will reconnect by email. 

Cheers, 

Oscar

[JonBit]

@Shopify  any news on this topic? Seems like the whole EU shipping tax calculation is incorrect if product tax overrides are applied. That could be a major downgrade to Shopify if this makes waves...
These kind of basics should not be solved through an app. I don't think EU merchants are willing to pay an app just to get their shipping tax calculated the right way.

[Oscar38]

No news yet. Latest I heard is that the US-team is looking into it but i highly doubt it. I agree that this needs to be sorted internally within the shopify system and should not require and third parties to sort out right shipping estimates. I don't want an app to sort out this basic (and important for book keeping) topic to guestimate whats right and not. I'm still waiting for a solution unfortunately... 

[jonasta]

Is there a third party solution for this?

Will gladly pay thousands per year for a solution

[HampusMalmstrom]

Having this same issue. In Sweden, for example, all books are taxed at 6 % instead of normal VAT 25 %. Local regulations state that shipping VAT should either follow the main VAT of the order (i.e. the VAT category with the largest sale value on the order) or be split out based on actual amounts for each VAT category.

But currently, when I try to order only a book, it sets the VAT for the book to 6 % due to my override, and then 25 % for the shipping. Even though there are no items in the basket that have VAT 25 %.

There is even a section on this in the Help Center, but no information on how to activate it.

https://help.shopify.com/en/manual/taxes/shipping-tax