Setting up product pricing and VAT for the EU under IOSS

Setting up product pricing and VAT for the EU under IOSS

Anchoright
Tourist
6 0 2

I sell from the UK and charge UK customers VAT, for which I am putting the full (incl VAT) price into the product pricing and ticking the "charge tax on this variant" box. Shopify then separates out the tax on the order / invoice etc.

 

I am about to start charging VAT under the IOSS scheme to customers in the EU. As the VAT rates differ across the countries is there a way to price per country (a lot of work) or I simply leave the same full price (incl VAT) as per the UK countries and shopify will also separate out the taxes as per the UK customers?

 

 

Replies 3 (3)

TeemuEAS
Shopify Partner
127 1 24

Dear Anchoright, 

 

you obligated to charge the taxes in accordance with the destination country regulation. I am unfortunately not the tech guy at EAS Project, so I recommend get in touch with us via our website / https://apps.shopify.com/eas-eu-compliance.

 

We can have you ready with your own IOSS number in a day. 

More on our application behind the link (do check the reviews). We are happy to assist 🙂  

 

 

 

 

 

EAS EU & UK Compliance app is a fully automated European VAT solution for Shopify.
Anchoright
Tourist
6 0 2

Thanks for the response. It's not a question of systems, I have that in place, I am looking for clarity on whether or not to include the taxes in the price when putting in the product.

TeemuEAS
Shopify Partner
127 1 24

Please elaborate if I misunderstood. Adding VAT at checkout, called exclusive pricing, hikes the total by the destination country VAT. Which varies from 17% to 27% in EU. And any sudden increase like that will cause the customer to drop the cart never to return. 

 

So inclusive pricing is the way to do it. Flat price for everyone taking into account your biggest markets VAT % or EU average about 21% and then your margin fluctuates. Clear and transparent to the end-customer. 

 

Shopify does have a clever 3rd option as well, dynamic pricing. You set the base price with for example UK VAT 20% and lock your margin. When you sell to Germany, the price reduces by 1% and when you sell to poor Hungarians, it increases by 7%. Not my personal favourite as you lose an important marketing tool with price points. 

EAS EU & UK Compliance app is a fully automated European VAT solution for Shopify.