Incorrect VAT when arranging exchange item from Europe (IOSS)

[Pez-SY]

I'm in the UK and have my IOSS information on Shopify so that VAT is collected from the relevant countries.

I have a problem where if a customer wants to exchange an item (same value just different colour), the VAT calculation is incorrect.

Example: product base price is £18.33, so £22 in the UK (20% VAT) or £22.91 when sent to Sweden (25% VAT).

Customer wants to exchange it for a different colour, which has the same price. When I use the Return & Exchange functionality in Shopify, it says the exchange item is £22 and the customer is due £0.91 refund. See pic below. Is this a bug, an oversight from Shopify, or a setting I've not done right?

[Rostislav]

HI Pez, 

It is clearly a bug . Shopify recently overhauled the whole returns process and it needs to be fixed. When the order is initially calculated for Sweden the tax engine removes UK VAT and adds Swedish VAT :   22/1.2*1,25=22.91. When the exchange is enabled Shopify skips this calculation and the price is taken from the catalogue , i.e. 22 GBP.  

So your settings are correct. Obviously,  while handling it on the operator side  - just do not do any refunds .  But the whole thing is just what it is 😞

I wonder if Shopify support can comment on it.  We did make a request to the tax team on that , but it takes some time to fix such issues.