International Sales Tax Inquiry: Net or Gross Pricing Strategy?

Greyhawk
Shopify Partner
12 0 0

Hi 😃

 

I have a question about taxes (international sales) and I'm a bit confused about it. 🤔

 

I exclusively sell outside the EU. Since my shipments always remain below the de minimis value concerning import taxes and customs, and I also won't reach the sales threshold in any of the countries where I will sell to private customers, triggering VAT obligations, I probably don't need to charge VAT on my products.

 

In this case, technically I should list the product prices in the shop as net prices, but this might seem strange to customers because most countries are accustomed to seeing gross prices (i.e., 'incl. Taxes').

 

So, what should I do in this case? Should I not charge any taxes on the products, so that neither taxes are calculated in the shop nor at checkout? Or should I levy taxes on the product but indicate them as 0%?

 

 

I have read the following on the internet, among other things:

 

"In your case, where you exclusively sell to private customers outside the EU and do not exceed the import tax thresholds or country-specific sales thresholds, you indeed do not have to charge VAT on your products.

 

The correct procedure would be to list net prices in your shop, as you do not have to invoice VAT. However, net prices may seem unusual to end customers, as you rightly noted.

 

Therefore, a common practice in such cases is to list prices as 'gross prices' and show the VAT at 0%. This ensures transparency for customers and avoids confusion.

 

Specifically, you would proceed as follows:

 

Set your product prices as net prices in the shop system.

Configure the tax rate for all products at 0% VAT.

In the shopping cart and checkout, the net prices will now be displayed as 'gross prices including 0% VAT'.

This way, your customers can see familiar 'gross prices', while you incur no tax burden, as 0% VAT is calculated.

 

This method is widely accepted and provides a customer-friendly solution for your cross-border sales outside the EU without VAT liability."

 

Is this correct, should I proceed this way? 🤔

 

Thank you for your help and best regards!

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