VAT to EU after Brexit

LA_GENT1
New Member
28 0 0

Hi, 

 

Apologies for being lazy and not reading through the tons of material here on Brexit but I just want a simple answer. Now UK has left EU, Do we need to charge VAT to EU customers ? Yes or No ? 

 

Thank you 

Replies 11 (11)
IndigoAntiques
Tourist
8 0 2

No you don't need to charge VAT to EU customers. They are treated as Rest of World now. 

LA_GENT1
New Member
28 0 0

Thank you!

RobS
Shopify Partner
24 0 9

At the moment you should exclude VAT although your shipping provider may offer a tax and duties paid service so you can pay the VAT and any import duty on behalf of your customer if you can figure out a way of building that cost into what you charge. I have looked at this though and coming to the conclusion that this is too complicated to implement in practice.

Then, a change comes into force in July this year when those selling into the EU will have to collect VAT at the point of sale. This is basically the same set up that the UK has imposed on overseas sales since 1st Jan 2021. The threshold below which you will have to collect EU VAT is orders of 150 euros, above that it won't be required. I've no idea at the moment how to address this with our store.

You can find details of the coming changes here:

https://ec.europa.eu/taxation_customs/business/vat/modernising-vat-cross-border-ecommerce_en#heading...

 

LA_GENT1
New Member
28 0 0

Thank you! This is clear. 

welcomebrand
Shopify Partner
53 1 100

Been trying to get this sorted on my store - is anyone able to point me in the direction of how to set up my admin to charge normal UK VAT for UK orders but exclude or remove orders for EU shipments? I don't ship to Rest of World, just UK and EU. 

Thanks!

LA_GENT1
New Member
28 0 0
There should be a notification from Shopify on your Home Dashboard that
will direct you to this. Otherwise it is in settings >> Taxes
BP99
New Member
3 0 0

Sorry to tag onto this..

Because we are required in the UK to show prices including taxes, and because I only have one store, then I don't think it is possible for me to actually charge an EU customer less in total than a UK customer.  Have I understood this correctly?

For instance a product I sell in the UK for £120 is made up of £100 for me and £20 of VAT.

Ideally when I sell to someone in the EU (Italy as an example) then I'd like to sell it to them for £100 because when they receive it they will have to pay the courier £22 (Italian VAT is 22%) plus any handling fees.  If I change my Shopify tax setting for EU to be 'not collecting' then I think all that does is mark my £120 income as £0 in taxes and £120 to me - ie my Italain consumer still pays £120 AND then has to pay £22 plus handling fee on receiving it.

I am too small to register for taxes in every EU country which I think rules out me paying taxes on behalf of my EU customers.

I think this leaves me two options:

1. Run a discrete International store where all prices are shown ex VAT and where I only ship to non-UK customers

2. Have a special discount based on shipping location which (if non UK) would give a discount of 16.67% - (which effectively removes the UK VAT) and would make my £120 become £100 post discount.

I would love it if (2) were possible as I would at least be fair to my non-UK customers even if they have a hassle when they receive the goods, but I suspect that it isn't...

Am I understanding this all correctly?

 

welcomebrand
Shopify Partner
53 1 100

@BP99 wrote:

Sorry to tag onto this..

Because we are required in the UK to show prices including taxes, and because I only have one store, then I don't think it is possible for me to actually charge an EU customer less in total than a UK customer.  Have I understood this correctly?

For instance a product I sell in the UK for £120 is made up of £100 for me and £20 of VAT.

Ideally when I sell to someone in the EU (Italy as an example) then I'd like to sell it to them for £100 because when they receive it they will have to pay the courier £22 (Italian VAT is 22%) plus any handling fees.  If I change my Shopify tax setting for EU to be 'not collecting' then I think all that does is mark my £120 income as £0 in taxes and £120 to me - ie my Italain consumer still pays £120 AND then has to pay £22 plus handling fee on receiving it.

I am too small to register for taxes in every EU country which I think rules out me paying taxes on behalf of my EU customers.

I think this leaves me two options:

1. Run a discrete International store where all prices are shown ex VAT and where I only ship to non-UK customers

2. Have a special discount based on shipping location which (if non UK) would give a discount of 16.67% - (which effectively removes the UK VAT) and would make my £120 become £100 post discount.

I would love it if (2) were possible as I would at least be fair to my non-UK customers even if they have a hassle when they receive the goods, but I suspect that it isn't...

Am I understanding this all correctly?

 


I don't think you'd be able to do option 2 if you run any other discounts on your store because Shopify can't stack discounts so if you have a half price offer or discount code from an email or something, either that or your shipping discount wouldn't apply. 

RobS
Shopify Partner
24 0 9

@BP99 Since the update shopify did at the end of December then if you set up your store taxes to "not collecting" for EU then it should now deduct the VAT amount as you want it to. This works for us and we have now started to make some sales to the EU again.

Previously this function was not available and store owners have been asking shopify to make this change for years. It really shouldn't have taken them so long to make this change.

Just be aware of the change in VAT rules selling into the EU from July 2021 where you will have to start collecting VAT on sales under 150 euros. I'm not sure what the practical solution is for that yet and am still looking into it.

BP99
New Member
3 0 0

Oh - you are right, that does work and is very helpful. Thank you!

For anyone else reading this:

- this didn't work for me at first as I hadn't ticked 'include or exclude tax based on your customers country'. [This is within Settings>Taxes, scroll down to the bottom].

- for what it is worth I also have 'Not Collecting' now set for everywhere except for United Kingdom and Isle of Man. I <think> this is correct.

- it obviously requires some messaging to customers. On my site I have added a note into FAQs and delivery pages and I plan to change the wording on the default Shopify message on the checkout page which is: "Your cart has been updated based on your shipping country"

 
 

BP99_0-1611569803610.png

 

 

 

 

Sufio
Shopify Partner
145 1 54

Hi all!

It's been quite some time since you posted this, but I'd like to share our short blog post about Brexit and what it means for Shopify merchants. I hope you will find it insightful!

If you're considering using an app for invoicing, our team is happy to adjust them so that they are fully compliant with the new changes - just get in touch with us at support@sufio.com

- Max from Sufio