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Gift Cards and new EU VAT regulations

Teoalessi
Tourist
5 0 2

HI all,

 

We want to add gift cards to our EU based e-commerce website.

According to the new EU VAT regulation our gift cards would fall in the Single Purpose Voucher (because at the moment of the sale we know it will be used only on our website and only for products that are subject to 22% VAT) and would therefore need to be taxed for VAT at the moment in which the card is sold.

In order to avoid paying taxes twice, when the card is sold and then again when the product is sold, we would have to find a way to deduct the value of the card from the taxable amount of the product purchase (as if it was a voucher) rather than consider it a method of payment.

Has anybody else had the same issue? How did you deal with it? Ideas/Suggestions?

Replies 60 (60)
PetraS
Excursionist
17 0 13

@Victor Is there an update on this matter?

 

 

Jochem73
Tourist
3 0 1

@Victor Same question here. I got offered the Gift Card possibility today (because Shopify wants to help their shop owners, considering COVID-19..) 
But tell me.. How can there still be no solution for this?! This problem has been there for all EU shop owners for more than a year now..

PetraS
Excursionist
17 0 13
Same here @Jochem73.

A lot of my customers are asking to buy gift cards right now, so they can help my company out with the coronavirus and its impact on smaller businesses.

Currently I'm missing out on a lot of sales because Shopify is too lazy to actually put in the effort to be compliant with EU laws...

Honestly it's getting to the point where I'm seriously considering changing ecommerce platforms. But as a Dutch company with a mainly US client base, it's a pain in the ass.
Stefan_VR
Shopify Partner
7 0 4
I agree this should be included but I've been using Rise: gift card & loyalty app and it ticks all the Tax boxes and is just a nicer delivery system overall, give it a go.
Victor
Shopify Staff
Shopify Staff
1469 140 334

Hi @PetraS & @Jochem73,

 

I passed on the feedback given here by different merchants to our internal team reviewing this measure, as per my last post, but do not have an update to provide at this time. It would seem that @Stefan_VR has found some luck with the Rise: Gift Cards & Loyalty app so I would recommend giving that a try if you're wanting to change the way taxes are charged for gift cards,

 

Kind regards,

 

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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Jochem73
Tourist
3 0 1

Dear Victor,

thank you for passing on the feedback.. But since this problem has never been adressed up until now, I don't expect it to be adressed in the near future.
And the app you're referring to is a minimal monthly charge of $19.99.. So thank you Shopify for helping me out with your temporarily free use of the gift card option. Don't take this personal, but I'll forget about it all together.

Kind regards, Jochem

PetraS
Excursionist
17 0 13

@Victor as @Jochem73 states, that app has a cost of almost $20,- for a feature shopify is pretending to be offering to all merchants for free during the Coronavirus outbreak. Not exactly a fair thing to make all EU sellers use an expensive app for 1 simple feature that is actually mandatory by law for sellers in an area that big. It's just sad that the only repsonse we're getting as vendors is basically 'meh, we don't care about the European market enough to cater to them properly, but we'll happily charge you for everything'.

 

Sadly, this is yet another thing in which Shopify is utterly failing their client base who isn't in the US or Canada. 

 

Cheers for 'helping' us EU vendors through a crisis. Not.

PetraS
Excursionist
17 0 13

@Victor I've also checked the Rise app, it does allow for VAT (tax) to be charged but it WILL also charge tax when the client redeems the gift card. Which means taxes are charged twice over the same sum. 

 

In other words: Rise does nothing to solve the issue.

Stefan_VR
Shopify Partner
7 0 4
This is true but your VAT is not paid out twice and the voucher value remains unchanged.
You are liable to pay the VAT portion on the card sold but retain the VAT on the product when paid for with the voucher so this simply shifts the VAT liability point. In this way you simply deduct all VAT from sales paid for by gift cards from your total VAT liability. Again, I agree with all the comments that Shopify should include this functionality.
Verdant-Spark
Shopify Partner
91 8 26

I'll chuck in my tuppenceworth here - I wholeheartedly agree with all the comments by my fellow EU partners. Having lost the best part of a morning down a VAT rabbithole, I can confirm that they are correct, and that VAT must be charged on the voucher when sold. If a client has a company accountant then it's theoretically possible to throw this over the fence at them and let them sort out who paid for what and with what, and they can sort out the VAT liability, but this is not currently shining Shopify in a kindly light: by not being (i) flexible and (ii) expedient in these matter, it appears that you are a platform willing to take a merchant's money but not provide the service one would expect of a market leader.

 

An urgent update on this and some action by Shopify would appear to be overdue and, yes, I know it's only been days since the last comment but given that many stores wish, and are relying, on selling gift cards to remain afloat this is a serious issue.

NKM
New Member
1 0 0

Hi @Victor,

is there now already an update on this topic? 

Best, 

Anna

PetraS
Excursionist
17 0 13

Like @NKM I'd like to know if there is an update on this yet @Victor

 

Why is this basic feature that taking so long to implement. It's literally a case of coding in the option to toggle on or off tax collection on a sale and making sure it doesn't double charge.

Victor
Shopify Staff
Shopify Staff
1469 140 334

Hey guys,

 

I do not have an update to provide on this issue at this time, but I will be sure to touch base with the relevant team on this matter again. I can appreciate the frustration in this option not being available for you, and I have ensured that the feedback and suggestions made in this thread have all been passed onto our team looking into this feature so they can better understand how it is affecting merchants in the EU.

 

As before, I will be sure to post an update here if and when I have one to provide.

 

Kind regards,

 

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
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 - To learn more visit the Shopify Help Center or the Shopify Blog

navarra-lab
Shopify Partner
3 0 0

Hey @Victor 

we're building a webstore for our client and we also need that feature.
It is legal requirement and its really not good enough that you do not provide a solution for this.

 

Looking forward to the resolution for this issue.

 

Regards

Michal

KoppanyKoltai
New Member
1 0 1

Dear @Victor!

Just red all the comments about this issue with gift card taxes. It's a pity that a company that is living from the merchants' whats are generated on it's platform doesn't take care of the merchants who generate business. 
BTW what about an offer? We, who live on the old continent and living under the trade regulation of the EU can get a discount of our Shopify usage as we have to pay for an app to be able to sell our products legally?
That would be a generous way to deal with this ridiculous issue. 

Best regards
Koppany

i3orny
New Member
1 0 0

I've read every word of this thread. I'm a UK business and I'm under the UK laws, and I have an accountant telling me I need to fix this ASAP... so, I require a solution @Victor. Please can you flag this again with whoever you need to flag it with. There are thousands ok UK businesses using Shopify and currently breaking the law selling gift cards without tax...

 

Please help be to fix this. 

xbyx
New Member
1 0 0

@Victor Please advice a timeframe for a solution. Currently we are operating against the law. wich requires to add VAT to gift cards. Please offer a solution to add VAT.

Victor
Shopify Staff
Shopify Staff
1469 140 334

Hi @xbyx,

I do not have an update to provide, nor do I have any sort of timeframe on when a change may be made. I know that this issue is with the relevant internal team and if I hear any updates on this matter, I will be sure to share it here as soon as I do.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

Bene1
New Member
1 0 0

Is there already an update available ? 

Same issues here! 

TNBC
Tourist
6 0 5

Any news on this? My accountant raised the issue as well.

On top, the new Tax module says I should edit my variants to charge tax, there's a technical error when I try to do so.

'Charge Tax on this product' is also not available in the edit price for gift cards.