Problem with Dutch VAT for books, and tax in orders outside of the Netherlands

[v2_]

Hi all!

I'm struggling with the VAT-bit for our bookstore...

The first problem is that we anyway did not get any tax calculated, even though registered with a Dutch VAT number. In the end we 'hacked' it in with making a product tax-opverride per group of books, and setting the 9% tax.
And it worked, now in the invoice there is the 9% tax calculated, the total price of the book stays the same. We got really happy, finally it worked!

But then we got an order of Norway. What happened is that the tax was taken of the book, but not put in the invoice. Basically we the customer 9% reduction on the price. With the hack we were using, we would have to make a product override per product-group per country...

In the end we basically want all buyers of all countries to pay 9% tax, and see it in the invoice.
What can I do to make this work? I'm sure I'm missing something 🙈

Thanks so much!!

Stellata

[Rostislav]

Hi Stellata, 

You issue cannot be resolved without additional info (and solution does exist!)

What I need to know to get you proper setttings:

1. What is the country of the store registration?

2. How your tax and duty settings are set for EU? 

3. What are your general tax settings ?

4. How goods are set in your catalog (taxable or non taxable)?

5. Where do you sell from (country of the ship-from location)? 

You can right to us and I will  ask our support to help you:

info@easproject.com 

www.easproject.org - the best EU and UK VAT complience solution

[v2_]

Thanks Rostislav,

Here my answers!

1. The Netherlands is country of store registration.

2. Duty settings EU

3. General tax settings

We actually switched off tax over shipping, because our connection with the dutch transporter (postnl) we use does not charge tax. Shipping amouts are automatic, and then with this ticker on the btw goes off the tax. In that we would give an unintented reduction of 9% to the customer over shipping. But tha's a different issue!

4. Yes, Charge Tax ticker is on!

5. We sell and ship from the Netherlands

Thanks!

[Rostislav]

A couple of general observations:

1. EU tax setttings .

You do not need to input country specififc registrations  (in your case you input your NL VAT number which is even more strange  -technically it should be local registrations not NL in here, but read further on OSS) . I presume that you are registered for Union OSS special VAT scheme and it covers all EU (you can limit delivery to countries via shipping zone, I see no need not ot calculate taxes for EU countries). So you can set up your  EU tax mode as One-stop-shop , not as single registrations (which you apparantly do not have, correct me if I am wrong) 

If you are not registered for OSS - you have a bit of an issue , you should be VAT registered for the EU countries of consumption , which is kinda wierd in your case. But I do not know your situation here . 

2. Tax over shipping is still on , it is always on  for EU irrespective of the  general taxation settings, see the example below: 

Tax on shipping is  off :

But it is still calculated in the order:

Shopify clearly states this setting is on always : 

And this is correct from the taxation point of view . shipping is incedental cost and part of the customs value /VAT tax base . See my comment to a Danish guy on that 

No tax on shipping, please - Shopify Community

It does not matter that PosNL does not charge VAT to you on crossborder shipping (it is input VAT for you) . Waht matters is that you have to charge on shipping your client (it is output VAT for you). It technically works also for domestic sales. 

Of course you can handle tax on shipping via country shipping overrides, but it is wrong from the fiscal standpoint. 

I will come back to you on Norway  sales in a few minutes  

[Rostislav]

Sales to third (Non-EU countries) 

You have dynamic prices in the settings ("include or exclude tax based on your customer's country" . This is where you can read more on that : 

Dynamic tax-inclusive pricing · Shopify Help Center 

Since your store address is in the Netherlands ( I presume) and you collect taxes in EU the pricing for a 100 EUR product for Norway , USA etc (i.e. the country where you do not collect taxes) will be (with dynamic pricing on) :

 100/1,21= 82.65

If you want the taxes in such country to be collected you add this country to the list of the countries where you collect tax and the price will change as follows (for Norway , 25 % VAT):

 100/1,21 (NL VAT)*1.25 (NO VAT) = 103.31

What you may do is disconnect dynamic pricing, and you will have the following situation (merch price is 60 EUR in the catalog, inlusive pricing): 

1.taxes are still collected in Norway  (in taxes and duties  seetings)

2.taxes are not collected in Norway (in taxes and duties  seetings)

Of course disconnecting dynamic pricing will also influence the way how the sales will look for EU (delivery to Finalnd , 24 percent VAT, EU taxes are collected ). In this case you would have "real" inclusiv pricing situation (all prices will be the same for all EU countries, inclusive national VAT rate) 

Hope this helps.

If you deliver to the UK we can offer you an easy UK VAT complience solution, visit www.easproject.com

[v2_]

Thanks,

So if I find the dynamic prizing option and switch it of, then for all countries the tax value will be based on the Dutch vat? And I can also force that to 9% (books)? Or should I do that per country?

Cheers,

Stellata

[Rostislav]

Stellata,

Not really . If you switch off the dynamic pricing  , you will have the following situation:

Delivery to Finland (24 percent VAT, Price 60 EUR VAT inclusive) , VAT is 14.51 (24 % inclisive in75 EUR)

Delivery to the Netherlands:

 VAT 21 percent inclusive , 13.01 EUR in 75 EUR price 

Delivery to Belgium with the override set to 5 percent  

due to override (5%  set for Belgium)  it is only 3.57  VAT due on  the delivery there.

As you see all the merch prices are the same for all the destinations (non EU included) 

Collected  and calculated VAT depends on the tax settings and overrides for sepcific countries. 

If you do not collect taxes in a paticular country the price is shown still as it is in your catalog (60 EUR plus applicable shipping and no taxes collected )

I hope this will help.    

[v2_]

Hi Rostislav,

Sorry, I have been busy with other things. Thanks for your extensive answers.. Thursday I will try to implement your suggestions!
Reading back I see I made an error in one of my reactions. I stated that BTW is hold off VAT, but I meant shipping..

We ship with PostNL.
Their invoice does not include tax. If they ask 10 euro for shipping, there is no VAT in that amount, it's 0%.
But then we calculate the shipping to the customer, by law we now have to ask 9% (the same amount as the book) VAT over shipping.

It should be:
book 91.74
shipping 10
tax book (8.26) and shipping (0.90) = 9.16
total including VAT 110,90

But shopify takes the tax off the 100 book amount and off the PostNL shipping of 10
So what happens is:
book 91.74
shipping 9.17
tax book and shipping (8.26+0.83) = 9.09
total included VAT 110

The latter makes it that we pay 0.90 shipping instead of the customer.

I hope you understand my question. And maybe it was already in your answer, then I will understand it by going through it again Thursday!
Thanks!
Stellata

[v2_]

Nobody knows? Is there a helpdesk I can ask these questions?

[Rostislav]

Hi,

I seem to have been negliecting my duties here 🙂

You have a bit wrong view on the issue that you describe . You have to destigush between input and output VAT . it is common misapprehension of the situation. 

Do have a look here on my answer to the Shopify community :

https://community.shopify.com/c/shopify-discussions/no-tax-on-shipping-please/m-p/1570871

I hope it helps. 

[Rostislav]

About the reduced rates -  when it comes to books it is applicable in many EU countries. Using overrides is the right way to do it. Contact us  (see next message) and we will provide a list of EU coutntries where books are sold with reduced rates