Hello all, Im very new to online selling but have many years in bricks and mortar selling. As a new company we have chosen not to register for VAT - not expecting to reach the VAT threshold for a long time!
How do I set my shopify store to not VAT registered? and therefore no VAT due on sales?
I can set my retail prices ok - but the invoice shows VAT charged - which it is not. so I cannot send out invoices that are inaccurate. we would have a legal problem as well as misleading customers.
there must be other non vat regsitered traders out there - how have you solved this?
the online chat person suggested i create a seprate collection for EU sales. not the point at all.
Great question and that completely makes sense regarding the threshold. Shopify has a very helpful guide on non-USA taxes which goes through everything you would need to know about setting up taxes for your store. I also want to share another helpful guide with you for tax overrides and exemptions which goes into detail for VAT exemptions in the UK. You can see the guide by clicking here. There is one other potential workaround on this. It is a little more technical but it is definitely worth a look to see if it is what you are looking for and if it can work for you. It is an advanced tutorial and is not supported by Shopify, but if you think this could be your solution, you could reach out to a Shopify expert directly to help you with it as a small task.
I hope this helps and does clear this up for you a little with the aid of the guides. Please donât hesitate to ask should you have any other questions about this or anything else.
Not sure if you got this fixed Julia, I realise weâre now 2 years on from when you posted, so I hope so! Iâve just started a shopify store, new to online sales and was having the same issue. I found your post in my research. Iâve just come off the customer support and it seems to have worked fine. So, for anyone finding Juliaâs post now ⌠Try this: Go to your SETTINGS, found bottom left of your admin dashboard. Then SETTINGS>BILLING>Tax registration>Iâm not VAT registered>SAVE. Then, and this is what I missed, you need to edit settings on TAX collected: SETTINGS> TAXES> Tax Regions. Scroll all countries making sure they say NOT COLLECTING. Mine was default set to COLLECTING under United Kingdom. To change this simply hit SET UP. It will show a default of 20% under the title COUNTRY TAX. Enter 0 here and then click SAVE. You should then be back to the same page that has the list of countries. All countries should show NOT COLLECTING. Below the list, there is also the section TAX CALCULATIONS. You need to uncheck the box âShow all prices with tax includedâ. As I said, this appears to have worked for me. Hopefully it may help others. Of course be sure to check whether you should or shouldnât be VAT registered and all that
Hey KTWPhotography. Thanks for that useful piece of information. I am still building my website and was wondering if I should pay any tax. I am an International student living in the UK, planning on selling physical goods through shopify. I dont have much idea about any rules here. Could you please message me privately about the steps I should take and things I should do before my website goes online for the customers. Thanks a lot again.
Iâm not @KTW_Photography , but I wanted to jump in here and offer some assistance. Iâd recommend checking out the first post of the dedicated tax thread we offer for UK merchants. This post includes a number of resources that should help you with this.
Iâd start by reading the links provided there from the UK government website, which outline rules on charging and paying VAT when selling goods in the UK. I would suggest checking out this link in particular, which specifies when you and your business must be registered for VAT to HM Revenue and Customs. They currently state:
You must register for VAT if your VAT taxable turnover goes over ÂŁ85,000 (the âthresholdâ), or you know that it will. Your VAT taxable turnover is the total of everything sold that is not VAT exempt.
This means that if you are just starting out, you will likely not need to register for VAT and charge your customers VAT on their orders at this time. Iâd encourage you to read through the different resources I posted in the taxes thread though to gain a more thorough understanding of the tax system in the UK for businesses, and what you obligations are and will be.
Thank you so much, Victor. You made it crisp and clear for me to understand. So, I can start a business with a VAT number which is really a good thing. I was also wondering if I should register my company anywhere like the Govt website before I start? It is my own brand and will be selling custom made goods.
No problem at all, Iâm glad it helped. I donât believe you will need to register your business with the Government when starting out, no, and there are various considerations to make when doing so. Iâd recommend checking out the website smallbusiness.co.uk, along with the Governmentâs documentation, as it provides plenty of guidance on this topic. Some articles Iâd recommend are:
I found your post very helpful. I am new to Shopify and HMRC said that I donât need to be VAT registered so that means I need to follow your instructions?
I am slightly confused because an adviser from Shopify said that my costumers in Europe will be charged extra VAT. how is this possible?
Thank you for reaching out, and Iâm glad to hear that you found the post helpful. Learning and understanding your tax obligations can be a bit of a headache, and ultimately nobody at Shopify can tell you exactly what these obligations areâwe are not tax advisors and different merchants will have different obligations. All we can really do is point you in the right direction of where to find this information and tell you how to set things up within the Shopify admin.
As mentioned earlier in this thread, HMRC state that VAT registration is mandatory only if you meet either of the following conditions:
You expect your VAT taxable turnover to be more than ÂŁ85,000 in the next 30-day period.> * Your business had a VAT taxable turnover of more than ÂŁ85,000 over the last 12 months.
This is all per the governmentâs website, found here. Customers in the UK or the EU will only be charged VAT if you enable taxes for either of these regions, which you should not need to do if youâre not VAT registered. This is something youâll want to check in on if you are unsure, or consult with a tax professional. The government also have some information about selling abroad:
Hey, just reading up about taxes and like to check something. Iâm based in the UK. Just starting out and wonât be registering for VAT yet. Iâm looking into dropshipping items produced in China that I intend on selling in Canada, US and Australia. Wondering if I need to check the box âcharge tax on shipping ratesâ? Thanks!
Thanks for reaching out. The âcharge tax on shipping ratesâ option is only needed if you are required to charge taxes on shipping in any location you sell to. If you are just starting out you likely will not need to do this, but Iâd encourage you to do your own research into the tax laws of the countries you are selling into and to consult a tax professional if you are unsure of your own obligations.
Thanks for all the advice, Iâm too in the UK and nowhere near the VAT threshold. Iâve set up my tax settings as above but what should I do with the âCharge tax on this productâ option on my products?
Actually, Iâve read Victorâs link and now Iâm confused again. Iâm not sure what to do with the âShow all prices with tax includedâ box either..? All countries are listed as ânot collectingâ in my settings.
No need to apologize! Getting your head around taxes can always be tricky, so thereâs no shame in reaching out for help. Iâm happy to offer my advice.
If youâre not required to charge taxes for your products yet, either in the UK or in other regions where to may sell to, you can leave the âcharge tax on this productâ option disabled. You would only need to enable this option if and when you are required to charge any of your customers sales taxes when they place their orders. This option can also be used to determine which products require taxes to be charged when bought for when you are collecting and paying sales taxes, as some products may be tax-exempt. You can leave this option disabled for now, if indeed you are not charging sales tax at this time.
In terms of the âShow all prices with tax includedâ option, it again doesnât matter too much if you are not collecting sales taxes at this time, but if your primary market is the UK/ EU then you can go ahead and enable it. This option determines whether the listed prices of your products includes the taxable amount, and if itâs disabled then any eligible taxes will be added as an additional cost to the listed price of the product (which is generally how taxes are shown in the USA and Canada). If you enable this option and a customer places an order, they will see that a tax rate of 0% has been applied to the order if youâve not required them to pay any tax.
You can read more about setting up taxes here, but please let me know if youâve any further questions.
good luck with your shop too.