Removing tax for international orders from UK

Phishtitz
Visitor
3 0 4

Hello


We have a store based in UK. The prices we list include tax. When we have an international order we need to remove tax. I've been told this can't be done? Is this correct?

This then flags up a huge problem: we shouldn't be charging VAT on international sales, and it’s also illegal to show ex-VAT prices to retail customers in the UK. So we’re stuck with not being able to sell internationally.

Replies 55 (55)

Sak7
Tourist
5 0 8

This is the same problem we are having here at Germany. We just had a lengthy chat with an "expert" saying that only Shopify Plus customers have that option to change their Checkout.liquid file to allow them to remove VAT from international orders. Apparently that is a $2000 + per month option, because that is what Shopify Plus account costs. The "expert" said that for security reason they do not allow merchants to have access to their Checkout.liquid (I guess if you pay $2000/month, then you get access to it). So we asked the "expert" to make the change for us. We don't need access to the Checkout.liquid, we just need the change to be made, and he kept saying they can't do it. The problem for us is that we are a young brand are generating more interest internationally. So we are losing potential business, which is also potential business for Shopify. This is VERY frustrating.

Phishtitz
Visitor
3 0 4

Hi Sak7, yes very frutsrating isn't it. It's more frustarting when you get so little help from Shopify to rectify the situation.

However we've now found a way to make it work. We now list all prices in Shopify ex VAT. Shopify can work out whether or not to include the VAT at the checkout depending on teh address that  the customer enters. The missing link is how to make the prices show VAT on the product pages (In the UK it is illegal to show ex VAT prices only) We did that by following this advice https://community.shopify.com/c/Shopify-Design/Product-pages-Show-VAT-prices-on-your-product-pages/m...

Hope that helps?

Sak7
Tourist
5 0 8

Exactly. In Europe the customer is used to seeing the price with VAT, so to show it without VAT only to add it at checkout is not a good look. And what makes this worst is that Shopify posted the code to have the VAT removed at checkout. LOL!! So all the "expert" had to do is take that code and post it in our Checkout.liquid for us, and the problem would be solved. SMH!

 

Thank you for the advice. I shall give your suggestion a go. I'll let you know how it turns out.

 

Much appreciated.

Victor
Shopify Staff
2532 232 539

Hi @Sak7 & @Phishtitz,

 

Thank you for reaching out with your questions, and I know that this is a pain point for merchants in the UK and elsewhere in Europe. By default, when you have prices set to include tax (as you likely would in the UK), customers from countries where you do not need to charge VAT will still pay the VAT-inclusive price, although at checkout they will not see any taxes included in their order. I have addressed this issue in greater detail in the regional support thread we offer on the topic of taxes for UK-based merchants.

 

The best solution for this problem is what @Phishtitz recommended—namely, setting your prices to not include VAT, and then doing some custom coding to show the VAT-inclusive price on the product pages alongside the default VAT-exclusive price. This means customers not eligible to pay tax will be able to buy the product at the VAT-exclusive rate, but customers who are required to pay tax will be able to see the VAT-inclusive price as well, which they will be charged at checkout. It's not a perfect solution, I know, but it does allow your international customers to buy products at their correct prices when they don't have to pay tax, whilst also meeting the requirement of displaying VAT-inclusive rates on the website as well.

 

One other option I feel is worth mentioning is setting up a second store for international markets, which many businesses on Shopify decide to do as they grow in scale. This allows merchants to better tailor their sites to the different regions they are selling to, and would also allow you to show tax-inclusive prices on one store and tax-exclusive ones on the other. This may not be a suitable solution for either of your stores but I wanted to mention it just incase.

 

I hope this has helped but please let me know if you've any further questions.

 

Kind regards,

 

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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Sak7
Tourist
5 0 8

Hi Victor,

Honestly, the simplest solution is to have Shopify offer solution to everyone that has a paid account and not only to those that are paying $2000 + /month, because with online stores, the world becomes the customer, and not just the local market. And considering that Shopify posted the code on how to have VAT removed from the Checkout process on the Checkout.liquid, if it really is a security issue of not letting the merchant access the Checkout.liquid (except for those willing to pay $2000 + /month) at the very least Shopify should make the change for the merchant, so that the merchant personally doesn't have to make that change. That is common sense. What Shopify is saying is that the smaller merchants do not matter as much as the larger merchants, when in reality the larger merchants need less assistance because they already have a footing the market.

 

And to be even more honest we were literally on the woo commerce website looking to change hosts when we received the reply from Phishtitz.

 

Kind Regards.

Sak7
Tourist
5 0 8

So we have tried this new technique of getting our website to update the international pricing and ... it is not working. Only the collection pages display the 2 prices, but not the singular product page. And on the Cart page it doesn't either. And we have been working at it for 2 days now. On the product page, when the page is loading, the price information flashes and then disappears.

 

This is what we mean with common sense. Make that one option available to all, or, have Shopify make the changes for the merchant is it really is a security issue.

JamesONeill
Shopify Partner
4 0 3

Hi Victor,

I've also been trying to find workarounds for this problem for a while and I wanted to make you aware of some of the pain points that come from listing prices ex-VAT and calculating the total price in the theme:

  • This only works if you're just using the online store channel as other channels still have the prices listed ex-VAT.
  • Depending on the theme you're using this can be substantially more difficult than just updating the product prices in templates. Themes that have AJAX carts can be trickier to update all the price instances, especially those that only include compiled JavaScript files.

Shopify really needs a more rigorous solution for handling VAT. No workaround I've seen so far comes without significant disadvantages.

 

Victor
Shopify Staff
2532 232 539

Hi @JamesONeill,

Thank you for making this point, and yes, in the scenarios you've referenced it would be difficult/ impossible to display both VAT-inclusive and VAT-exclusive prices simultaneously. It's a known issue and limitation, and I will be sure to submit your feedback to our development team for their consideration.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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Armanov
Visitor
2 0 2

We have same problems as described above. We just moved to shopify from woocommerce and now we are looking for alternative platforms becuase tax issue problem is to big flaw. Can you please inform us if there is any general solution in near future for EU shops that shipps internationally.

JamesONeill
Shopify Partner
4 0 3

Thanks for your response @Victor 

I'm not sure what you mean about showing tax-inclusive and tax-exclusive prices simultaneously. I don't think anybody has that use-case, what we need is a way of consistently showing the full domestic price across all sales channels but subtracting that tax at the checkout for overseas customers.

Victor
Shopify Staff
2532 232 539

Hi @JamesONeill,

My apologies, I don't think I was particularly clear. If you show tax-inclusive pricing, customers who are not eligible to pay VAT/ sales tax will still pay the full price of the product, but the tax rate will show as 0%. If you decide to list your prices as tax-exclusive, then this can serve as a workaround—customers who are not eligible to pay VAT pay this pre-tax price, and customers who are required to pay VAT will pay this tax-exclusive price + the correct amount of tax on top of it.

As you mentioned in your prior comment though, there are limitations to this method and I submitted your feedback to our development team in relation to this. I believe in some countries you are required to list the tax-inclusive prices on your online store, so you can follow this guide to add them alongside the default tax-exclusive ones, but as you mentioned there are potential drawbacks to this method.

I understand what you're looking to achieve here but, unfortunately, it is not possible at this time. Your feedback has been submitted nonetheless and will be reviewed by our development team.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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WoodyBrighton
Excursionist
20 0 8

I have this problem too... we are a new Australian store and want to sell internationally. Shopify CLAIMS to be able to support international sales, but a big warning to people considering using the platform is that, as Victor confirms, Shopify can't handle this basic element necessary for making international sales.

Australia has 10% VAT (called GST here) and prices are shown inclusive of this tax. But if I set the tax for an international sale to 0% (for example selling to New Zealand), Shopify doesn't adjust the sales price for the tax... it just has the Aussie selling price (which includes Aust VAT).

So disappointing!

Victor, how do we fix this?

I have just reviewed 10 supposedly leading Australian Shopify stores and none correctly remove VAT on sales to NZ (or apply NZ's 15% VAT).

Victor, can you PM me, I'd like to get a credit until Shopify can correct this.

 

 

Victor
Shopify Staff
2532 232 539

Hi @WoodyBrighton,

Thank you for your feedback on this and, as with others who have echoed similar sentiments in this thread, I can see why this is a disappointing restriction to come across. I know this is something our development team are aware of and I will be sure to pass your comments onto them for their consideration. Merchant feedback plays a large part in determining which changes are made to the platform so we appreciate the candid suggestions here.

Myself and my colleagues do not converse with merchants over the private messaging function here on the Community Forums, so please feel free to contact our support team at help.shopify.com/questions if you'd like to speak to a member of our team directly. I will say ahead of time that a credit or refund is unlikely for this complaint.

Please also feel free to let me know if you've any further questions about this matter.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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WoodyBrighton
Excursionist
20 0 8

Thanks.

Actually, Shopify have already given me a credit, and I would encourage all Australian customers and other affected customers to demand their credit also.

Under Australian Consumer Law, you can't advertise to do something and then not deliver it. In fact, Shopify's liability may not just the fees but also the lost development time incurred by users.

The error in Shopify is that when you have "my prices include taxes" checked, then for international sales it is mistakenly using the price including local (domestic) taxes as the base price, instead of first taking off the local (domestic) tax.

It is a pretty obvious error and a pretty easy fix.

Shopify knows we are located in Australia, it knows the price includes tax, and it knows the tax is 10%. All it needs to do is to use the correct base price for international sales. The math is Base Price Excluding Tax = Price Including Tax / (1+ tax rate).

Can you please let us know the expected timing for this fix?

The marketing spin is "Sell everywhere" and "Build a global store in days" when actually, if your domestic market has tax included, then you can only sell in your domestic market because Shopify can't handle international taxes.

 

Victor
Shopify Staff
2532 232 539

Hi @WoodyBrighton,

Thank you for your reply and I'm glad to hear that you were able to receive a credit from our support team. I sympathize with your frustrations here and can see how this change would make selling internationally much easier and more efficient for you. At this time I have no update on when this change is due, if indeed it is made, but I was sure to submit your feedback and comments to our development team after I responded to your prior message. I know this is something other merchants (including those in this thread) would like to see amended so I hope this is something that is addressed soon, and I will look to update this thread if/ when it happens.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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TimothyCann
Tourist
6 0 2

In January when the UK leaves the European Union, goods exported from the UK to Europe will have to be minus the VAT as this will be collected at the point where the goods enter the EU and will be charged to the customer and any due duty.

When this happens we will still need by UK law to show the price including taxes on the product.
So anyone in europe may face the prospect of having to be charged VAT twice.

As this will effect all UK shopify sites in the UK and all their sales to Europe, is this a sufficiently serious problem that shopify will have to sort? and before January 1st.

Victor
Shopify Staff
2532 232 539

Hi @TimothyCann,

Thank you for reaching out about this. I know that our taxes team monitor wide-scale tax changes such as what you've referenced here, and I know with the transition period set to conclude on December 31, 2020, merchants in the UK will be eager to ensure that their Shopify stores are equipped to adapt to this change. I believe at this time this is something we are monitoring and will be keeping a close eye on as we head towards 2021. At this time we do not have an update to share, but I will be sure to pass on your comments to our taxes team.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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WoodyBrighton
Excursionist
20 0 8

Hi Timothy,

For whatever reason Shopify seem to have stopped development on the base Shopify product some time ago. You'll see from other threads that that Shopify have been aware of this tax calculation error for a couple of years. Staff like Victor say "yes, we know it's a pain point" but the reality is they've not touched it for years.

If you want to sell to international customers, Shopify is not the product for you. The Shopify workaround is to create a separate store for each country.

We need to sell to international customers, so we're looking to migrate to Magento or BigCommerce.

Sounds like lots in the UK will have to migrate, good luck with the move!

Andrew

 

TimothyCann
Tourist
6 0 2

Is there any way to know if shopify will 'not' be providing a fix in time or even not working on the problem.

As we may well be forced to change platform as without a fix a large amount of our business around europe will become unworkable on the 1st of January. As it will with many businesses from the UK to Europe, and Europe to the UK.

Victor
Shopify Staff
2532 232 539

Hi @TimothyCann,

I'll just clarify how our existing tax system works and how things would work if you no longer need to charge EU merchants VAT as of January 1st, 2021.

If you have a £100.00 product that is tax-inclusive with a VAT rate of 20%, then a customer due to pay tax will see a tax charge of £16.67 when they checkout. However, if you have a customer based in a country who is not due to pay taxes, then they will still pay the £100.00 but at a tax rate of 0%. Both customers pay the same price, but only one is paying taxes on the product.

I am not completely literate on what the tax implications will be when it comes to selling to EU customers from the UK as of 1st January, 2021, but you will be able to adjust your tax settings in Shopify on this date to no longer collect taxes from EU-based customers from this point, if indeed you are charging VAT to EU-based customers at this time.

If VAT is due to be charged to the customer when the goods enter the EU (along with any respective duties), then this setup will ensure that the customer is not paying VAT at the time of purchase, whilst you continue to charge VAT to your customers in the UK.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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JamesONeill
Shopify Partner
4 0 3

If VAT is due to be charged to the customer when the goods enter the EU (along with any respective duties), then this setup will ensure that the customer is not paying VAT at the time of purchase, whilst you continue to charge VAT to your customers in the UK.

I'm sorry but I'm not sure I follow your logic here. From the customer's perspective they are paying VAT at the time of purchase, the fact that you don't show it as such at the checkout is irrelevant to them, they are buying a product from a UK store with a price that is quoted as inclusive of UK VAT. They pay the exact same price as a UK customer would pay and then from next year they may have to pay additional taxes when it reaches their country.

I don't understand who this setup would actually be useful for.

WoodyBrighton
Excursionist
20 0 8

Hi Victor, thanks for trying but I'm sorry mate you don't seem to understand how value-added tax works.

Each country can have its own VAT. In Australia we call it Goods and Services Tax and it's 10%. In New Zealand, next door, it's 15%.

When I sell to a domestic customer, I need to charge Australian VAT. When I sell to an international cusotmer, I do not need to charge Australian VAT. And then, depending on the international country, I might need to charge a tax specific to that country.

Some countries drive cars on the right (like the US), and some countries drive cars on the left (like Australia). And some countries quote prices excluding VAT (like the US) and some countries quote prices inclusive of VAT (required by law).

Shopify accomodates this with two modes: "My prices exclude VAT" and "My Prices include VAT". And this works fine for domestic sales.

However, when it comes to international sales, if you are running in "My Prices include VAT", then when you sell to an international customer you do not need to charge local VAT, and you need to remove the local VAT from the price. This is where the coding error is in Shopify. Shopify does not remove the domestic VAT from the export sales price.

In your UK 100GBP example, the price excluding 20% VAT = 83.33GBP export price. But Shopify says is 100GBP!

I know everyone in the Shopify team are all busy counting their options and looking through Ferrari brochures, but I would be really grateful if you could escalate this critical to the most senior person you can find. It is really a very small coding error to fix.

thanks

Andrew

 

Victor
Shopify Staff
2532 232 539

Hi @WoodyBrighton,

Thank you for your detailed explanations. I am aware that whether or not you charge taxes depends on the customer's location, and that the amount of tax charged (if any at all) is dependant on the country or region that the customer is based in.

What I was trying to explain was that irrespective of whether or not the customer is due to pay VAT or any form of sales tax on an order, when you list prices as tax-inclusive on the Shopify platform the customer will pay the tax-inclusive price regardless. If they are due to pay tax then they will see the relevant tax rate and the amount of tax charged—e.g. at 100 GBP price and a VAT rate of 20%, the amount charged in tax will be 16.67 GBP. If they are not due to pay VAT, then they will still pay the 100 GBP price, but at a 0% tax rate. The value of the order is not reduced because the customer is not paying VAT.

I recognize that this is not the best setup for merchants selling abroad to customers who do not need to pay tax, and wish to offer them cheaper prices as a result. Workarounds for this include setting prices to be tax-exclusive, so customers due to pay VAT will have the tax added on and customers not due to pay VAT will pay the tax-exclusive price, or using apps that allow for multi-country pricing such as this one. If you set prices to be tax-exclusive but are mandated by law to show tax-inclusive prices on the storefront as well, we have a guide that provides information on how to edit your theme's code to display these prices as well.

Nonetheless, I appreciate that having the default option of allowing customers not due to pay tax to pay a cheaper price for your products would be beneficial and important when selling abroad. I will be sure to submit your feedback to our development team and detail why this change would be helpful to you and many other businesses as well.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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WoodyBrighton
Excursionist
20 0 8

Hi Victor,

Can you please provide an update on fixing this error in Shopify?

thanks

Andrew

 

johnwinckel
Tourist
7 0 9

@Victor Please let us know about the possibility of the default option of allowing customers not due to pay tax to pay a cheaper price for products, it's important when selling abroad B2B.

Regards John

Victor
Shopify Staff
2532 232 539

Hi @johnwinckel,

Thank you for reaching out about this. At this time, it is not possible to set two different price points for a product (i.e. one including tax, and one excluding tax) when you have enabled the option to list prices with taxes included enabled in Settings > Taxes. If you have this option enabled, customers who are not due to pay tax will still pay the full price of the product, but with the tax rate set to 0%.

If you wish to set lower prices for customers in countries where you do not require them to pay tax, you can use an app such as Multi Country Pricing to gain greater control over your prices in different locations. Alternatively, you could instead set your prices to not include taxes by default, and have them added on at checkout—this means tax-exempt customers would pay the pre-tax price, and customers who are required to pay tax will still do so when they complete their checkout. If you are required to also show the tax-inclusive price on your product pages, we have a guide on how you can edit your theme's code and add these prices here.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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LNArt
Visitor
1 0 5

Hi,

 

"customers who are not due to pay tax will still pay the full price of the product, but with the tax rate set to 0%" --- I honestly can't believe what I am reading. It is the most absurd thing I have ever heard. It is dishonest towards the customer not to say a deception.

 

I almost signed up for a subscription, LUCKILY I didn't just yet, and after reading this thread I surely will not. Bye Shopify - you made a clear point of why I shouldn't start building my shop here. So thankful I stumbled on this topic. Next stop - Wordpress.

 

Best regards,

Armanov
Visitor
2 0 2

A 130 billon worth company can't make simple taxes calculation. We will probably move to big commerce.

SiobhanMack
Tourist
4 0 6

I've just built my entire site on Shopify since they claim to be open for international business, my US customer's pricing wasn't adjusted and I thought I'd maybe not set my tax settings correctly, I am so horrified reading this thread that Victor thinks it's acceptable for us to just charge international customers the same price as everyone else because they will be paying a 0% rate. My customers pay import tax on the other side when the order arrives so effectively being charged twice which is incredibly off-putting for my customer base. 

 

Setting the option to not include tax is just not acceptable for UK businesses- you are misleading companies in the UK to building a website with you which is absolutely not fit for purpose.

 

Is there likely to be any solution to this or do I need to move platform?

coleatkinson
Shopify Staff
141 13 76

Hi everyone, my name is Cole and I work with the cross border team at Shopify.

As a past merchant myself who sold between New Zealand and Australia on the platform, I certainly empathize with all your sentiments and wanted to let you know that fixing how inclusive/exclusive tax pricing works when selling internationally is a major priority for us. This is a large internal change so we are unable to provide a specific timeline at the moment, but we will be sure to share updates in this thread when we can.

We are working hard on adding other global selling capabilities in addition to the above, and you will see more things around managing international pricing and import duties / taxes in 2021 as well. Again, we will share in this thread when available. We always appreciate your views and feedback and thank you for your patience.

Cole | Product @Shopify 
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AllBam
Tourist
9 0 5

Cole,

This is the first time we have seen anyone from Shopify recognising that there is an issue that needs to be fixed, so that is a step forward.

However, the lack of a timeframe is frustrating. This is an issue which has been signalled for years and Shopify only now seems to be taking it seriously. We are a UK business with around 10% of our sales to consumers in EU countries. From 1 January we will not charge VAT to EU customers, but UK law will still require that our prices are shown inclusive of VAT which means that our EU customers will also pay the VAT-inclusive price. In addition, they will also have to pay their domestic VAT when the goods are imported into the EU, so will be overpaying. We will lose sales because of this, and Shopify will therefore also lose income.

This is actually a problem right now for sales to Jersey and Guernsey (which are not subject to VAT) as well as sales to other non-EU customers, but will become much more acute (and costly to us) from 1 January. Please fix this issue as soon as possible.

All Bamboo

SiobhanMack
Tourist
4 0 6

Hi Cole

Are we any further forward on reaching a resolve on this? As many of us UK businesses have mentioned on this thread we can’t charge EU countries VAT from 1/1/2021 yet cannot advertise our prices ex vat- this date is fast approaching. 

Do you have a solution for us? 

Siobhan 

aerostar
Visitor
1 0 2

Hi Cole

This should be a simple fix. If your prices include say 19% tax/Vat, the product price which excludes the Tax should be the Tax included price / 1.19... simple maths.. Please make this a priority as it is much needed... Do you have any timeline available?

 

stevenshand
Tourist
3 0 4

I just want to add my input to this to confirm that it indeed a MASSIVE shortcoming to the Shopify platform. FWIW I think the the platform is the best I've ever used but unfortunately I'm going to have to move away from it. I've dreaded this time coming, I always assumed the issue would be given priority as Brexit became a reality and the impact became much bigger but it's clear from the posts on here and my comms with the support team that there's no motivation to get this fixed.

 

I actually suspect that there's loads of merchants out there that don't even realise this is an issue but once the Brexit rules kick in it'll become a problem for them. By then, it'll be too late and I think lots of merchants will already have jumped shipped. 

 

I wonder if the importance of this issue just isn't being communicated to the correct people? 

 

What also rubs salt into the wounds is when I get an email from Shopify telling me 'Brexit’s deadline is fast approaching' and lists the things I should be doing to prepare. Thanks but I've already got my shit in order, it's you that has stuff to sort out, not me.

 

  

AllBam
Tourist
9 0 5

This is great news! We have tried it out for Jersey/Guernsey customers (already outside the EU VAT area) and it works.

Hopefully others will find the following information in relation to delivery prices useful. We use a postcode based shipping app which calculates delivery costs based on the delivery country/postcode and other factors such as weight and order value:

  • The shipping price entered in our app is the actual price charged to customers - VAT is not automatically deducted from that shipping price. So, if we set the app to specify a flat rate of £6.00 for deliveries to Jersey, and that is how much the customer is charged for delivery to Jersey.
  • The app can calculate shipping cost based on order value. For Jersey/Guernsey customers it does this based on the VAT-free order value, not the VAT-exclusive order value.

It will be good to align the storefront prices to the actual price customers will pay (presumably based on geolocation of the customer), but this is a great start. For now, we use the Geo Targeting ‑ Custom Pop‑Ups app to display a message to Jersey/Guernsey customers (and in future EU customers) to let them know that displayed prices include UK VAT which will be deducted at checkout.

Thank you Shopify for finally listening!

 

stevenshand
Tourist
3 0 4

Really, really pleased this has been fixed. Thank you.

I do have one issue though and hopefully it's just a setup/configuration issue.

It looks like the tax is removed from the item in the correct way but it doesn't look like the tax is being removed from the shipping cost.

for example, I'm in the UK and I sell an Item for £50 to the US. When I checkout I see the item listed at £41.67 (£50 less the 20% VAT) which is correct but the shipping cost which is £14 is listed still as £14, it should also have the tax removed.

 

There is a checkbox in the settings that allow me to disable tax on shipping rates but that disables them for all shipping rates including domestic ones which it shouldn't.

 

I've looked through the documentation including the recent stuff regarding this new fix but can't see anything that would fix this.    

AllBam
Tourist
9 0 5

Steven,

See my earlier post about shipping costs - I agree that VAT is not deducted from shipping costs.

I think the way to fix this is to have, in your example, two separate shipping zones with different prices: a UK zone with the shipping price of £14.00 and a US zone with a shipping price of £11.67.

AllBam

stevenshand
Tourist
3 0 4

AllBam,

 

I should have been clearer, it's not really about the cost. I do have different shipping zones setup. The problem is in the reporting of the tax. Currently if it costs me £14 to send the item to the US and I don't make any margin on shipping costs, I'm just passing the cost on, my tax report will show that I have collected £2.33 in VAT which I will have to pay to HMRC meaning I will actually be losing money on shipping.

 

Steven

 

AllBam
Tourist
9 0 5

Steven,

OK, I haven't checked out how this works in the Shopify tax reports. If it works as you say this must be a glitch and worth reporting to Shopify.

To be honest, we are just very grateful that Shopify have finally made this fix. A significant chunk of our sales are to the EU, and we were very concerned that they would simply evaporate without this change.

Worth noting the small print that it doesn't work with accelerated payment methods, such as Google Pay, Apple Pay etc. We will add a warning about that to our geolocation pop-up:

"Including or excluding tax based on your customer's country isn't supported in the following cases:

  • Stores on the Shopify Plus plan that use Avalara AvaTax.
  • Stores that use third party apps that offer post-purchase upselling.
  • Stores that use the international pricing beta feature.
  • Accelerated payment methods such as Google Pay or Apple Pay."

AllBam

coleatkinson
Shopify Staff
141 13 76

Hi everyone, today we have begun rolling out the first of our planned improvements to help you in this area when selling internationally by introducing a new tax setting:

Final copy.png

This is rolling out progressively over the next couple of days. Some of you may already notice it available in your store.

This release will adjust your prices at checkout based on where your store is based and where you are shipping to. For example if you are based in the UK with 20% VAT included in your prices, selling a £100 item:

  • Domestic sales will continue to be £100
  • A sale to Australia would be
    • £91.66, if you have a tax registration in Australia (£100 less 20% VAT + 10% Australian GST)
    • £83.33, if you don't have a tax registration in Australia (£100 less 20% VAT)

final.png

You can read about this change and how it works here.

Specifically in regards to the UK, it is still part of the EU. So if you are shipping to another EU country and do not have a VAT registration there, your local VAT rate is still applied. After Brexit on Jan 1, the UK and the EU will be separated out in Shopify to collect the right amount of VAT, according to your tax registrations, when selling from the UK to EU countries and vice versa.

In 2021, we will improve the storefront experience to align with checkout, so what a buyer sees on your storefront (depending on their country) will also be what they see at checkout, without the need for such adjustments.

Cole | Product @Shopify 
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peteskilebowski
Visitor
3 0 0

Thanks Cole, works great but I found a bug: if you go to checkout and select Apple Pay, and DO NOT change the shipping service (from say, standard to Express), the tax will still be included in the charge. But, toggle the shipping service, and the price 'resets' and recognises VAT should not be charged. I tested this on Quoc.cc, checking out with a US card to my US address. 

AllBam
Tourist
9 0 5

As I mentioned above, Shopify acknowledge that this currently doesn't work with accelerated payment methods, such as Apple Pay.

We have added a geolocation pop-up to tell customers (a) that prices include VAT but that will be deducted at checkout, and (b) not to use accelerated payment methods (such as PayPal Express Checkout, Apple Pay, Google Pay, Amazon Pay).

Hopefully this will be fixed next year.

peteskilebowski
Visitor
3 0 0
Thanks for that - but it does actually work if toggling the shipping service is available from the store.

It’s not ideal that the implementation is only half complete - expedited payment methods are used more often than not, and any code improvement should flow equally across all methods. I can’t think of anything better crafted to confuse the consumer and befuddle the store owner - except the original tax issue, of course!


AllBam
Tourist
9 0 5
Completely agree. Even though people seem to have been telling Shopify for years about this issue, I think they have only recently worked out that it is going to cost them money if they don't fix it. The messages from Cole in this chain are the first time I have seen Shopify acknowledge that there is an issue, and I think they are scrambling to make it work.
To be fair to Shopify, I expect that the coding changes are quite complex for this, particularly in the "front end" store (which, of course, hasn't changed yet) because everyone has different coding in their store themes. I am not holding my breath for those changes to be made any time soon.
But thank heavens for small mercies. At least we will be able to sell to EU customers from 1 January without charging UK VAT (even though they will have to pay their own VAT and, it seems at the moment, import duty).
peteskilebowski
Visitor
3 0 0
Indeed. Sadly, I suspect the growing exodus to BigCommerce had a lot to do with it. Although why Shopify persisted in such a strange, no-good-for-no-one tax policy in the first place, when even oscommerce / zen cart and the like had this down pat in the early 00’s, is beyond me.

But yes, better late than never!!

lolly2020
Explorer
39 0 32

@coleatkinson 

This is based on shipping zones, unfortunately while it works it's clashing for us in Republic of Ireland with taxes to Northern Ireland

We are VAT registered in Ireland, to ship to Northern Ireland we have to charge VAT - at the moment the VAT applies correctly.

Unfortunately because Shopify has refused to set up UK in zone, When we use the option you specify here, then VAT price is not shown to Northern Ireland as the shipping Zone is in the UK

Please can you let Shopify know how important it is to zone UK. 

This so frustrating even countries smaller than UK are zoned!!, at the very least treat Northern Ireland like a second country or something

So again we can not implement these change that a lot of people have benefited from!!

 

coleatkinson
Shopify Staff
141 13 76

@lolly2020 apologies I had missed your last response. Do you mind reaching out to our support team on this? While we are currently working on splitting Northern Ireland out into its own shipping zone, VAT should already be being treated correctly. While I can't dive into your store here to see specifics, I'd love it if you can raise this with our support team so we can take a closer look.

Cole | Product @Shopify 
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coleatkinson
Shopify Staff
141 13 76

Hi everyone, if you use our international domains product, you'll notice that the option to include or exclude taxes based on your customer's location now works on the storefront. This extends the work we announced at the end of last year to adjust prices in checkout, so buyer's in each country will not see the correct price up front, on the storefront itself.

In the next few weeks, this will be the same for all of our merchants selling in multiple currencies on Shopify Payments, not only those using international domains.

If you don't use multiple currencies, your buyers will still be charged the correct price at checkout with the adjustments that we originally released.

Cole | Product @Shopify 
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seanysean
Excursionist
18 0 5

@coleatkinson We are experiencing an issue with Internatioanal currency set up. We have selected to collect taxes in all EU countries and not for all non EU countries. We have set fixed manual conversion rates and rounding as is now possible. However, something unusual is happening. Shopify is outputting price to our feed manager = UK price less vat then converted to Euros and rounded up. For example a product we sell for 129 gbp should be 153.95 euro instead it is 127.95 in shopping feed and collection page. However on product page it is actually as it should be 153.95 euro... This causing a number of issues including mismatch with Google Ads showing lower price and product page the correct higher price..

Your thoughts would be appreciated.

 

Sean