Thanks for getting in touch. Taxes can often be a confusing subject, and understanding your obligations as a merchant from a tax perspective is not always easy. It's good to do your own research to learn more but if you are unsure, speaking to a tax professional is always advisable as they can help clarify what taxes you need to charge and remit, and when.
Rules set by HMRC currently dictate that you must register for VAT if your VAT taxable turnover exceeds the threshold of £85,000. It is possible to register before meeting this threshold, but this amount of taxable turnover is the threshold upon which you must register.
In terms of selling to other markets, you may be required to register for VAT in the EU based on certain conditions. You can read more on this on the Shopify Help Center, although you'll likely need to do further research to determine whether or not you are required to register for VAT in the EU.
For the US, you typically only need to register for sales tax if you have a tax nexus in a specific state, or state. A tax nexus can be defined a physical one, such as having a warehouse or employees in a state, or by economic conditions, such as earning a certain amount of revenue from customers based in a state. If you are just starting to sell to the US, it is unlikely that you'll need to register for sales tax in any state for the time being.
I hope this has helped, but I would also encourage you to read some of the VAT documentation provided by HRMC on their website. Please let me know if you have further questions.
Is it possible now to set up pricing so it will display the price including VAT to UK customers and display the price without to customers from other countries at the product level (ie not just at checkout)?
I read this on the shopify site -
To me this sounds like prices should be displayed correctly at the product level if multiple currencies and shopify payments are used, both of these are the case for my store but VAT is still only being added at checkout.
Thank you for getting in touch with your question. Can you tell me what your store's default currency is, and where you sell to where you don't wish VAT to be charged? Can you also tell me if you have prices set up so that taxes are included in the prices of your products, or if they're only added on at checkout?
Hi @Victor ,
Default is GBP, we sell globally and don't wish VAT to be charged outside of the UK, taxes are not included in the prices (except for UK customers) but are only visible at checkout, which is the issue.
I added an app, which is solving the issue for $5 per month, but it shows the ex. VAT price for a second before flicking to the full price. It seems like a little bit of code should solve this issue I would hope. It would be great if Shopify had a tick box for it though.
Okay, thank you for clarifying. My understanding is that it's required to have prices listed to include VAT when selling most types of products in the UK, which means checking the box that includes taxes is what you should be doing. However, the issue then is your customers in countries who do not have to pay VAT see the tax-inclusive prices, which of course can be a deterrent for them if they believe they have to pay more than they actually will need to.
The workaround you have currently—having prices as excluding VAT, but using an app to add the VAT onto the prices for UK customers—is a solid solution moving forward. However, Shopify does now allow merchants to include or exclude taxes based on the customer's location. Is this a setting you have enabled and set up?
We are located in EU and ship products to UK. We need the Tax of 20% applied in all cases: < 135 GBP and >135 GBP. How can we set it up in Shopify?
I have already tried to:
- Add Shipping Tax override - The rule around 135 GBP remains active
- add Product Tax override - The override works in case 1 product is in the cart, but the original rule is applied again as soon as there are more items in the cart.
Could you please advise?
Thank you for reaching out. Can you let me know if you are VAT-registered in the United Kingdom, or just in the European Union?
In most cases, VAT for orders over 135 GBP will not be charged when you are importing products into the UK from the EU. However, you are able to charge VAT to your customers for orders over 135 GBP if you add a physical location within the UK to your store, or if you add a third-party app to your store that can used to charge VAT to your customers, such as Zonos Duty and Tax. A tax override will not work for this scenario.