Printful charges me tax for shipping to the UK, but my business pays tax in The Netherlands. HELP!

[Debbie_Stokes]

I'm using Printful to dropship a few of my online products. Printful correctly exempts my orders from tax, as a business, while I collect and pay tax from EU customers in accordance with the regulations. I've run into a major problem in that, when an order is placed via my store (based in The Netherlands) by a UK customer, Printful charges UK VAT, which I can't recover. In other words, the UK VAT simply comes out of my profit, which basically leaves none. This can't be right. Can anyone help?

[Nick]

Hi @Debbie_Stokes,

Nick here from Shopify. Good question!

Taxes can be difficult to figure out even at the best of times. I looked into this for you and found that Printful has a help document based around why are you being charged tax where it states that VAT is added on some orders going to the EU, which you can see from the image below:

Without taking a closer look behind the scenes at the order it's hard to troubleshoot your specific case further. It could also be worth reaching out to Printful about his directly which you can do from their live chat function on the Printful website highlighted below:

I would say to reach out to Printful as the best next step to understand why they might have charged a tax on this particular order. 

Hope this helps!

All the best, Nick

[Debbie_Stokes]

Thanks, Nick. I appreciate your reply. However, I contacted Printful in the first instance, and they simply quoted what they say on their site. I've spoken to my tax advisor in The Netherlands, and he agrees that they have this wrong, so I feel a bit helpless...

[Nick]

Hi @Debbie_Stokes,

Apologies for the delay on getting back to you about this. 

Would you be able to explain this a little further for me, please? Is it charging a VAT when it shouldn't or is it just charging a different price of VAT for UK customers only? 

Could you also let me know how you have your tax settings set up in your Shopify admin too? For example, have you ticked the box to have all tax included in your prices as shown below?

I'm just trying to understand exactly what your situation is to see if there is a workaround we can look into for you. I'm also wondering if the Tax overrides and exemptions could be worthwhile looking into for you. One of the most common tax exemptions is VAT exemptions in the UK. You can find the Shopify help guide for Tax overrides and exemptions here. 

[Debbie_Stokes]

Hi Nick,

Thanks for sticking with this. The issue is not connected to my Shopify settings at all. To clarify:

1. My store is set up to include taxes in my prices, and all EU consumers (non-business) are charged Dutch VAT, 21%, when they place an order in my store. This is all working exactly as it should be. Meanwhile, EU business customers are exempt from VAT, except in The Netherlands, where Dutch VAT is charged by me and then recovered by the business customer via the Dutch tax authorities.

2. Similarly, Printful has my Dutch VAT number, and uses it to zero-rate VAT on my Printful invoices, as an EU business customer that is not based in a country where Printful has tax obligations. This is correct.
3. Now, if I were a UK business, where Printful apparently has tax obligations, they would charge me VAT even as a business customer (the same as I would charge a Dutch business customer, see point 2), and that would be correct. UK businesses can then recover that VAT from the UK authorities, and that's all fine.

4. So here's the problem: Printful is adding UK VAT to invoices billed to my Dutch company, in the event that I request them to fulfill an order to a UK customer. My Shopify customer invoices show Dutch tax on the original order, which I declare and pay. My Printful business invoices show UK tax, billed to me, which I cannot recover, as I am not a UK company. Hence there is something wrong with the way tax is handled by Printful.

To be honest, I don't expect you be able to solve this. But there must be other EU (non-UK) Shopify store owners, using Printful, in exactly the same predicament. How do they manage it??!

Best Wishes,

Debbie

[TheGecko]

Hi Debbie

Did you get this sorted out as I have the same problem and can't seem to get an answer

[Debbie_Stokes]

@TheGecko 

Hi - apologies, I didn't see your note until another reply came in recently. If you haven't seen the latest posts, please take a look. The more of us that come forward with this problem, the better the chance to resolve it, I hope!

Please can you let me know where your business is based?

Thanks,

Debbie

[TheGecko]

Hi Debbie

I am originally from the UK but I am living in Spain, over here you have to have a great deal of paperwork just to set up a business and we have to submit invoices every month to a Gestor / accountant they have looked into this as from day one we have to register for VAT (IVA in Spain) as there are no lower limits for sales before paying (crap) I am on the European VAT register and the Gestor has looked into this problem as there should no be double VAT rate and he assures me that Printful are in the wrong on this and they should not be charging VAT on purchases to the UK as I have to pay the VAT. with Printful I can't get past the customer help as they no doubt have a list of Q&A's for problems so the reply is the same. 

I am having a real problem as my market was the UK but I can't sell there because of this problem the prices are just too high, to be honest I am getting to the point with POD of finishing my store etc as we have such high outgoings here in Spain and it is just not making sales I can't seem to compete, I know it takes time to get things running but ads and the cost of the items are just not adding up.



Thank you for the reply I am interested in what happens with this as I know Printful are in the wrong on this.



Kind Regards Les

[Gabi_Dul]

Hi guys,

I know it's been a year since your last post but I am new and have similar problems and was wondering whether you have any solutions to the problems. I also find it problematic and so annoying that printful only decides on the place where the incoming order is fulfilled when my customer has alread paid. How do I set pricing? Also, when I bill someone in the EU and add my own VAT (please, feel sorry for me, in Hungary it's 27% ) but the product is shipped from the US - it may have to go through customs, how is it possible that my customer is not taxed twice?

Does anyone have any solution to these?

Really expecting someone's reply as we really want to get started but we are all confused about the tax and VAT.

Thanks.

Gabi

[DesignDrudge]

Hey Gabi,

unfortunately I wasn't successful yet. The issue is that the support team always replies the same way:

1. "Thanks for your request, we check with our legal department."
2. "Our legal department says that everything is correct."
3. Then explaining that there is "tax" shown on the invoice.

They really don't get it. They do not understand that their handling is wrong. I got this confirmed by my tax counselor.

Meanwhile I found another flaw: invoice timing. They take longer than allowed by EU laws to generate invoices. EU tax invoices must be created by the 15th of the next month, they take almost two months, as they only generate invoices when the package has arrived. Which is very convenient for them (they spare work by not having to reverse invoices in cases where it fails or is cancelled). But it's not convenient for a merchant who has to make monthly accounting.

I am actually thinking of contacting the CEO of Printful, need to figure out how to do so...

Your second question regarding customs taxes: You can not avoid the customer paying extra taxes and fees when the shipment comes from outside the EU. When I order items in the USA it could be that the shop taxes me and then my country taxes me again for the import. Import taxes and fees are always collected when sending items between two trade systems. You will need to inform your customers in advance that they might have to pay import taxes (depending on the value), so that they are not surprised. The only thing they can do for practicality is to keep single orders lower than the tax and import fee threshold in their respective country (it's different from country to country).

[Chaseflight]

Has anyone found a solution to this problem? We are losing money any time an order is fulfilled in the EU and shipped to a customer in the EU but we are based in California! It's very frustrating that we cannot get an answer from Printful and sucks that we have had to stop shipping to the UK and the EU because of this. Just curious if anyone has found a loophole/workaround to this issue. 

[DesignDrudge]

@Debbie_Stokes , 

I have exactly the same problem with Printful. And from what I know they get it completely wrong. And also with other Tax calculations. They charge VAT depending on the location of the end-customer and not YOUR business location.

According to the EU VAT Directives for Triangular Transactions, Business A (Printful) charges Business B (Your Business) without VAT while you charge your Customer (C) the according VAT rate of your Business location (Netherlands). 

Printful thinks that if they are registered in the UK they need to charge you, but that is nonsense because you are not a registered business in the UK. Therefore it is an Intra-EU business transaction, which requires "Reverse Charge VAT" which means they charge 0% VAT and you will report it to your tax authorities with Reverse Charge. They can not charge you a different countries VAT... if you are a registered VAT ID holder (a legit business).

Printful takes the actual end-customer's (your customer's) location and handles it as if it was their customer. Which is completely wrong.

I sent in numerous complaints about this and other incorrect practices by now. When it comes to accounting and bookkeeping, Printful is a nightmare. They are only very slowly and resistantly adapting to the European system.

Cheers

[Debbie_Stokes]

Hi there! Thanks so much for the reply, and for reinforcing the viewpoint. This situation has been driving me crazy!

There must be something we can do, right? I just don't know what, as I'm relatively new to this kind of business. Maybe there's some kind of EU arbitration service or something like that. I had hoped that the experts at Shopify would step in and help, but seems they don't understand the problem.

I had given up fighting, but your note has re-ignited my will to get this sorted out. Let's stay in touch!

Thanks,

Debbie

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@DesignDrudge wrote:

@Debbie_Stokes , 

I have exactly the same problem with Printful. And from what I know they get it completely wrong. And also with other Tax calculations. They charge VAT depending on the location of the end-customer and not YOUR business location.

According to the EU VAT Directives for Triangular Transactions, Business A (Printful) charges Business B (Your Business) without VAT while you charge your Customer (C) the according VAT rate of your Business location (Netherlands). 

Printful thinks that if they are registered in the UK they need to charge you, but that is nonsense because you are not a registered business in the UK. Therefore it is an Intra-EU business transaction, which requires "Reverse Charge VAT" which means they charge 0% VAT and you will report it to your tax authorities with Reverse Charge. They can not charge you a different countries VAT... if you are a registered VAT ID holder (a legit business).

Printful takes the actual end-customer's (your customer's) location and handles it as if it was their customer. Which is completely wrong.

I sent in numerous complaints about this and other incorrect practices by now. When it comes to accounting and bookkeeping, Printful is a nightmare. They are only very slowly and resistantly adapting to the European system.

---

[DesignDrudge]

Hey @Debbie_Stokes and @TheGecko !

Glad you both getting back to this topic. And I can feel your pain about not being able to have a solution for this. As a matter of fact, only Printful can provide a solution for this. I wrote them yesterday and they said they will forward the issue to their tax specialists... 

It seems that North American businesses (Shopify: Canada, Printful: USA) have a lot of trouble coping with the much more complex European tax laws. I am based in Germany and you can only imagine how strict everything is here. If we don't provide correct billing / invoicing we will not be able to factor in VAT or expenses in a business. That's the hard truth. 

In the past I negotiated with Printful on a number of topics that are "going wrong" which includes correct invoicing and VAT also. To be fair they adopted some changes which made it better but there are still major issues that prevent correct bookkeeping. While I understand that North American businesses have a hard time coping with EU tax laws, I do not understand why they do not have this figured out by now, as they claim to be "worldwide" operation businesses. Shopify does a much better job. They improved a lot in this year.

Printful: I think their problem is that they miss the part where it is factored in that we are businesses (with VAT ID) which are then handled differently than normal hobbyist shop owners. 

In our cases we charge VAT from the end-customer (who receives the goods) while Printful charges our business for the material and shipping costs. 

Intra-EU transactions between two VAT ID businesses must follow the "Reverse Charge" principle where no VAT is charged while the business paying for the goods and shipping will claim reverse charge with their tax authorities in their country.

Printful claims to have to charge you for the UK and Latvia because they are registered businesses there. BUT... that would only be true if we would be businesses registered in those countries too OR if we would not be businesses. Since they have a VAT ID in the UK and in Latvia and we have a VAT ID in a foreign EU country, it is a Triangular Transaction between multiple EU states, where only one time in the whole transaction the VAT is charged. It would be correct if our business would be located in the UK or Latvia too, but it isn't... that is called an "Exemption" because otherwise it would be over-complicated.

I hope that this can be sorted out quickly.

[Debbie_Stokes]

@DesignDrudge @TheGecko 

OK, we're all on the same page - the problem is identical for all of us. Agreed only Printful can solve it, but I haven't been able to get anywhere with them (including the issue of their bizarre invoices). Mike, I'm impressed that you've managed to get past Printful's front line customer service. Please keep us posted on their response. I'm thinking of placing a post on Quora Digest, see if we can get a few more businesses on board with the same problem and/or find someone that can recommend a suitable route to solution.

Cheers,

Debbie

[DesignDrudge]

Mike, I'm impressed that you've managed to get past Printful's front line customer service. Please keep us posted on their response.

Let's say I am fierce when it comes to a business partner where the partner claims to be a professional but then misses about some inches. I have a history of complaints with them and also made my further extension of business with them depending on how they will handle such (justified) complaints in the future. I want to open more POD shops with them but I am hesitant because it would give me more nightmares in this stage. (To be fair, they are excellent in their quality, service, prices, production speed, but that's not the topic here.)

I will keep you guys posted. I would appreciate if you post on Quora although I am not having an account there.

Also I will list my complaints about Printful "invoicing / bookkeeping" here just for information purposes and completeness, because I sense you both will have recognized the points below in the past too. I am not sure if it is too much for one thread though.

• Invoices need to have an ”Invoice Date“, not a ”Shipping Date“. It must be the date where the PDF was automatically created by the system. That is a legal requirement here in Europe. (That was immediately updated by Printful after my complaint)
• Printful Wallet refunds ("refund to wallet“) transactions need to have a downloadable PDF bill too. This is important for proving a transaction. No bill, no transaction here in Germany. The ”Printful Wallet“ is a booking account for legal purposes and can’t be treated as a grey area where money vanishes to or comes from. We have to log every deposit, withdrawal, refund to / from the wallet precisely. I now would have to make screenshots to prove a transaction.
• Billing User Interface needs much more improvement in usability. 
• Right now one can’t even search for Printful IDs, Order Numbers etc… I have to manually search and look over page for page. 
• The number of entries per page needs to be adjustable (25/50/100 etc). Right now it is like 10 lines which is very little, one has to flip through more pages instead of scrolling.
• Bulk PDF document downloads: this is so important. It really needs to be possible to download the documents in a selected date range by bulk. Especially if you have multiple shops with 100s of transactions per month you will go insane to download everything manually. The document files must be automatically named accordingly.
• Download file format: right now we have a proprietary ”XLS“ file format with was good in the 90s but standard now is ”CSV“ because every accounting software uses that format to import and export transactions. Best thing would be to provide both PDF and CSV and for old school’s sake you could keep XLS… 😉
• Transaction Dates in the export file: the date format should not be with text for the months like ”January“ to ”December“, as you have to see it internationally and every Printful customer around the world has a different language for his accounting software. Processing this makes it one step more. So keep it simple to a number format like ”MM.DD.YYYY“ or ”DD.MM.YYYY“ which is standard. 
• Integration with API to other bookkeeping software: www.getmyinvoices.com or www.zapier.com for example. So that importing documents to a bookkeeping software would be automatic.
• "Reverse Charges Apply": must be a sentence/phrase that is mandatory on Intra-EU B2B invoices...
• UK / Latvian VAT charges are incorrect: No VAT should be charged with Intra-EU Triangular Transactions including two businesses according to EU Tax laws.
• US "Sales Tax": Not sure if these are rightfully collected. Same problem with the point above. It should depend on where my business is located, not where the end-customer is located.

They actually took this as constructive criticism and said they would work on it... I appreciate that. Unfortunately they are not fast enough on it.