Learn more about handling and managing your taxes while running your Shopify store in Ireland.
This thread is part of the Regional Support threads offered for merchants in Ireland. To see which other topics are available, you can visit the Irish hub here.
As of September 1, 2020, the standard rate of Value-Added Tax (VAT) in Ireland is 21%, and will be until February 28, 2021. This is a lesser figure than the previous rate of 23%, and applies to most goods and services sold in Ireland that do not fall in the reduced rate categories.
Registering for VAT in Ireland is required when your turnover exceeds or is likely to exceed VAT thresholds, which vary depending on what you or your business sells. For example, a person selling services only must register for VAT if their revenue meets or will meet a threshold of €37,500, whereas the threshold for persons selling goods is €75,000. You can review the different VAT thresholds on the Irish Tax and Customs Revenue website.
You will need to be registered for VAT in order to set up taxes in Ireland and the European Union on Shopify. If you are registered for VAT, you will see an option to add VAT registration details by heading to Online Store > Taxes and clicking on “Set up” for the European Union:
You can also ensure that your prices are set to be tax-inclusive in your Shopify tax settings, meaning that any VAT charged to the customer will be included in the price of the product. This can be enabled by checking this box:
If you’re wanting to sell your products to customers in other EU member states, then you will need to register with the Irish tax authorities to acquire a VAT number. This number can then be used to charge VAT to your customers throughout the EU, based on their location. You typically cannot charge VAT to customers in other EU countries without first being VAT-registered in your own country.
If you have a significant business presence in another EU member state, or meet a revenue threshold of sales into another state, you may be required to register with the tax authorities in that state. Many EU countries have a distance selling threshold of €35,000 (e.g. Austria, France, Spain), although there are others with different thresholds (e.g. €100,000 in Germany and the Netherlands). Some EU countries do not use the Euro and their threshold will be listed in their own currency, such as in Sweden (with a threshold of SEK 320,000). Shopify provides an EU tax reference doc that includes a list of these thresholds.
The Brexit Transition concluded on December 31st, 2020, meaning that effective January 1, 2021, new tax laws apply to sales made between the United Kingdom and EU member states, including the Republic of Ireland. Shopify offers an updated guide on what Brexit means for VAT and taxes for both the UK and the EU member countries.
A result of Brexit is that Northern Ireland has adopted a dual status and is considered part of both the UK and EU tax regimes. If you have an EU VAT registration and are based in the Republic of Ireland, and make a sale to the customer in Northern Ireland, then EU VAT is charged. If you sell from Ireland to the rest of the UK, then VAT charges depend on whether you have a UK VAT registration and the cost of the order. This graph contains more information on what VAT is charged when selling from the Republic of Ireland into the UK, Northern Ireland, and to another EU country:
If you have a question or comment to make about managing your taxes with Shopify in Ireland, please post it below.
EU VAT is not been charged to Northern Ireland though. I tried placing order on our website and it's showing UK VAT at 20% instead of EU VAT 23% to Northern Ireland. We are bassed in republic of Ireland.
Thank you for reaching out. Are you registered for VAT in both the United Kingdom and the EU, or for just the EU? As per this documentation, if you make a sale to Northern Ireland from any EU country (such as Ireland), EU VAT is charged only if you are not registered for VAT in both the EU and the UK, in which case UK VAT is charged. If you are based in Ireland then I assume you may only be registered for EU VAT, but I just want to clarify that this is the case.
Victor | Shopify Social Care
Thank you for detailing your situation so clearly. I am aware that you do not also need to be VAT-registered in the United Kingdom to sell into Northern Ireland, but if you had been this would explain why the UK VAT rate of 20% was being charged instead of the Irish 23% for sales into Northern Ireland. This does seem to be an error, as per your sources and our own documentation.
I have reached out to a member of our taxes team about this issue and explained the problem that you are having. The only recommendation they could make without looking at your store is to change your default location to one based in Northern Ireland, as this may lead to our automated tax system to charge the Irish rate of VAT instead.
However, as I cannot authenticate you and take a look at this myself, I'd highly recommend contacting our support team directly for further assistance. They'll be able to view your tax settings and try to diagnose the issue, and can send this to our tax team for them to review if need be. Please quote them ticket number #25258097 and the member of support you're speaking to will be able to find my notes on this issue and proceed from there.
If you are selling goods priced under £135 GBP from the EU to the UK, you'll likely need to register for VAT in the UK. Once you have registered for VAT and entered in your VAT number into Shopify, VAT should be charged on orders under £135 GBP automatically at checkout. More information about this can be read here on the Shopify Help Center, and I would also recommend checking out our blog post on the impacts of Brexit on ecommerce for further guidance.
I am setting up the taxes in my store. I am based in the republic of ireland and i am only selling domestically ie. to Irish customers in Ireland. The products i am selling fall under the zero tax rate so i will not be charging vat on the products to the customers. How best to set up the tax page then?
I am also using shopify payment. regarding shopify payment, i belive there is 23% vat charged on the transaction by shopify. Why would there be a 23% VAT charged by shopify on the transaction when i am not charging VAT to my customers in the first place?
I am a bit confused, Appreciate clarification, Many thanks
Thank you for getting in touch. If you are selling products that you do not have to charge VAT for, then you can uncheck the "Charge tax on this product" option when editing or creating your products:
Leaving this box unchecked will tell Shopify's tax system that VAT is not due to be paid on this product, and therefore customers should not be charged tax at checkout.
In terms of the VAT Shopify charges Irish merchants on their payment processing fees, this is something Shopify is required to do to abide by local tax laws. This tax is charged regardless of whether or not you yourself are charging your customers VAT when they purchase your products. You can read more about this in the tax reporting section of the Shopify Help Center.
Did I get it right, I need to register for VAT regardless how much I sell if I target other EU countries? How should I handle the US market regarding taxes? Thanks, Annamaria
I checked our documentation on sales taxes in the European Union and this seems to be the case:
If your business is based in a European Union (EU) member country, and you want to sell to other countries within the EU, then you need to register with your local jurisdiction for a value-added tax (VAT) number. The VAT number will allow you to charge VAT to your customers in the EU, based on their location. You can set up tax overrides for products that have special tax rates.
If you are based in Ireland, you would therefore need to register for VAT in Ireland and you can then use the VAT number provided to sell to customers in other EU countries. More information on this can be found in the registration-based taxes in the EU section of the Shopify Help Center.
In terms of selling to the US, whether or not you need to register for and pay sales tax on orders you receive there will depend on whether or not you have a tax nexus in any US state. If you are deemed to have a tax nexus in a state, be it through physical factors or economic ones, then you'll likely be required to register for sales tax in that state and will need to start charging and paying sales tax for orders made into that state. This is explained in more detail in this article featured on the Shopify Blog.
I hope that explains things but please let me know if you have further questions!
Any update on this without having to change your default location as that would presumably impact local pickup.
The tax rate for selling from Republic of Ireland to Northern Ireland is still set at the GB rate of 20%. If we could add Northern Ireland as a Market by itself this might help but I can't see a way to do that. The UK is split into its regions for shipping but not for markets. Am I missing something?
Thank you for getting in touch. Can you let me know if you only have a tax registration in the Republic of Ireland, or if you have one in the United Kingdom as well? If you have both, the UK tax registration takes precedences and the UK VAT rate will be charged when selling products to Northern Ireland. This is outlined in this Help Center article:
Whether or not UK or EU VAT is charged when selling from an EU country to Northern Ireland should primarily depend on which tax registrations the business holds. If you do not hold a UK VAT registration but are still seeing the UK VAT rate of 20% when selling to Northern Ireland, please let me know and I'll take a further look into why this might be happening.
We only have vat registration in Republic of Ireland so sales to Northern Ireland should not be charging UK/GB vat but it's currently charging 20% GB vat. So it's not doing what the help doc says it does.
Can you check this out please?
Right, okay. This is something we'd need to take a closer look at and investigate more thoroughly. Please reach out to our support team directly so that you can authenticate yourself on your store and then our team can take a look at some examples. If need be, they can then escalate this to our taxes team to determine the cause of the issue.
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