I’m running an online store on Shopify, based in Portugal, and I have some doubts about charging VAT.
The store makes less than 10,000 euros a year and sells mainly books, which in Portugal have a VAT rate of 6%.
I’d like to know how I should proceed with collecting VAT for European Union countries. For example, for customers in Italy, where the VAT rate is 22%, should I apply the 22% rate or keep the 6% rate?
Also, for countries outside the European Union, what is the correct procedure? Should I invoice VAT at 0% or is it total exemption?
Since your store is located in Portugal and generates less than €10,000 in EU cross-border sales per year, you can charge Portuguese VAT (6%) to all EU customers based on the EU VAT threshold rules. And, if you generate more than €10,000 in sales to the EU, you will need to register for the One-Stop Shop (OSS) program and charge VAT based on the customer’s country (e.g. 22% for Italy).
For non-EU customers, VAT is typically not charged (0%) because exports are exempt from VAT under EU tax law. Customers may be required to pay import duties or customs duties upon delivery, depending on the laws of their country
You can also configure your tax settings in Shopify under Settings > Taxes and Duties to automatically charge the correct VAT rate
You may apply your home rules (i,e 6 percent VAT) if your sales are below 10K in the EU. Otherwise you will need to register for the Union OSS scheme and use it to supply to the EU. In most EU countries (with exception of Denmark ) VAT rates for books are reduced or 0. If you go for the Union OSS option , you would need to install manual overrides for your store to ensure that reduced VAT applies. We have a lot of publishers as customers and we set book stores daily. If you decide to go for OSS do contact us at www.easproject.com
