Dear Shopify friends,
I have tried to plea with Shopify support for help but they lack the motivation to read my questions or relate their answers to them.
Background:
I have a store in EU and I have started to ship products to most EU countries. I use OSS with my Danish VAT no. to file EU VAT for sales going to each EU country however Shopify does not seem to 1) add VAT correctly based on settings and 2) add the RIGHT VAT based on customer location..
OSS is setting is configured in “Taxes and duties → VAT on sales within EU → VAT registration”.
I have the Shopify Geolocation app installed.
My products fall within either the Standard or the Reduced VAT rate for some countries. Example is Germany in which most of my products use the reduced VAT rate of 7% (Food supplements) while the other use the regular 19% (Chemicals).
I have tried configuring a Product Override for these VAT rates for German customers.
Store i running Dawn v. 7.0 Theme with no custom coding but plenty of apps added.
What I want to achieve:
To be able to maintain the same profit margin regardless of VAT rate I need to configure a price WITHOUT VAT and then have Shopify ADD VAT to this ‘base-price’ depending on whether the customer is shopping from Denmark (25% VAT) or Germany (7%/19%).
Sounds easy, right? The settings seem to allow for this feature but what they do dont seem to reflect their intended function…
1) The setting “Include tax in prices” does not work.(See slide 1")
A: I have set a product price to 10€ in my product settings for this experiment. When the setting is OFF the customer-side price I see is 11,9€ (it adds 19% VAT to the base price). This would be perfect IF it added the right VAT rate of 7%.
When I go to checkout with the setting OFF it keeps the 11,9€ product price and adds shipping (which has VAT included i assume)
B: When the setting is ON the price i see customer-side is 9,52€ (it appears to subtract ~5% from the base price)
When I go to checkout the numbers make even less sense with the setting ON. (see same image as above)
Q How do these settings make any sense? They dont seem to do what they say. (I use a VPN from Germany when testing this and ensure to clear all cookies between testing)
2) Why does the setting “Include or exclude tax based on your customer’s country” also not seem to work?
I have this setting ON and in market preferences I have the setting ‘Include or exclude tax based on your customer’s country’ ON as well as the Geolocation app installed. Customers SHOULD see prices with their local VAT rate added. When I go to my website (from Denmark) I should see 25% VAT added to the price but I dont… The price is 76DKK (~10€, which means 0% VAT added). (see slide 2")
Q: How does the setting work? Why wont Shopify show customers the right VAT rate dynamically based on their location as the setting says it will?
Please note that I have tried to “hard-code” the right VAT-rates using the “Overwrite” settings for Germany so that 7% should be charged on my Food Supplement items and 19% only on my Chemical item, however, as all above settings this also seems to be ignored.
3) The Geolocation app does not work consistently either, perhaps this is an overlying issue to “2)”. It should automatically set Country and Currency but it does not change anything and even when i receive the pop-up customer-side and select Denmark and DKK currency it changes nothing, except sometimes?. Even when i go to the bottom and use the selector in the footer it only works sometimes and usually set the location to Spain when i try to select Denmark…
Q: Why does the Geolocation app made by Shopify not work? How do we get it to work?
I really hope someone can shed some light on these issues.
With kind regards,
Poul Mikkelsen