Mastering UK Tax: Your Essential Guide to Shopify Compliance

Update tax settings

The updates you need depend on how you currently manage your taxes.

Shopify Tax

If you use Shopify Tax, existing registration information is automatically updated. New registration information will not be added automatically and you will not be alerted if registration is required in other countries. If you are unsure where you are required to register, please contact your local tax advisor.

Setting up taxes manually

If you haven’t migrated to Shopify Tax, your existing settings for taxes aren’t updated. To update your tax settings, update to Shopify Tax or update your tax rates manually. Updates to registration-based tax calculations are permanent changes and cannot be undone.

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If you currently charge VAT in the UK and update to use Shopify Tax, you must update your registration information immediately after updating.

tax services

If you use Avalara to manage your taxes, your Avalara tax settings will be updated, but new registrations will not be added automatically. If you are unsure where you are required to register, please contact your local tax advisor. If you have any questions about the details, please contactAvalara Support TeamPlease contact us.

FAQ

Where can I find more information about Brexit?

The best way to get information about the impact of Brexit on your business is to contact your local tax accountant.

What is a tax agent? Do I need one for my store?

A tax agent is a local company or person who represents you in negotiations with the local tax office and is responsible for managing your tax reports and possibly your VAT liability.

If you are a merchant whose business is not located in an EU member state and you sell to a customer in an EU member state, some EU member states require you to have a local representative. From 1 January 2021, UK merchants may be required to appoint a tax representative when selling to EU customers. Not all EU member states require a tax representative, and requirements for e-commerce sellers may be relaxed.

If you are unsure whether you need to appoint a tax representative in an EU member state, please contact the relevant EU member state tax office or consult your local tax accountant.

Do I need a new EORI number?

It depends on the situation.Business registration identification number (EORI) refers to an identification code used to track and register customs permits, approvals, and decisions. Previously, one number could be used for tax authorities in both the UK and the rest of the EU, but from 1 January 2021 separate EORI numbers will be required for the UK and EU .

If you are importing goods into the EU and do not have an EORI number, or if you have an EORI number starting with GB issued in the UK, you will need to apply for an EU EORI. If you require an EU member country’s EORI number, please contact the relevant EU member state’s tax office.

If you are importing goods into the UK and do not have an EORI number, or if you have an EORI number issued by another EU member state, you will need to register a UK EORI. The UK EORI number isHM Revenue and Customs You can register at .

If you are unsure whether you need a new EORI number, please contact your local tax advisor.

We sell digital products. Will it affect me?

It depends on the situation. There are two variations of the VAT “Mini One Stop Shop” (MOSS) system. A ‘federated system’ is available for businesses established in the EU or with at least one branch office in an EU member state. A ‘non-associated’ regime is available for businesses established outside the EU or without branches in EU member states.

If you currently sell digital goods using the MOSS scheme, please contact your tax office or local tax accountant to determine how to register your VAT registration number.

How do I claim VAT in the UK if my order is over GBP 135?

If you need to charge tax on all orders from the United Kingdom, including orders over GBP 135, do one of the following:

Tax overrides cannot be used to charge UK VAT on orders over GBP 135.

Do we need to change our Terms of Use?

Required in most cases. From 1 January 2021, goods may be subject to import VAT and customs duties when they are imported or exported between the UK and an EU member state. widely spreadinternational trade termsare the following two Incoterms:

• Customs import conditions (DDP). Under this condition, the seller is responsible for covering any import costs (such as VAT or customs duties) that must be paid when the goods cross the border. This option protects customers from paying unexpected fees and taxes when they receive their products, but DDP requires merchants to manage the import process and is obligated to create a VAT registration number. may occur.
• Conditions for delivery to destination (DAP)。Delivery at destination (excluding customs duty) conditions (DDU). Under this condition, the seller is only responsible for the delivery of the goods, and the customer is responsible for paying the costs of importation (VAT, customs duties, clearing fees, etc.). While this option may save you from having to manage the import process, DAP can result in unexpected charges being charged to the customer and delays or returns of the shipment.

Merchant is responsible for deciding which Incoterm to use. In most EU member states, merchants are required to ensure that their customers are aware of the full amount of charges and taxes they may incur.

What is an HS code? How do I add one?

A statistical item (HS) number is a way to identify products shipped internationally so that taxes and duties can be accurately applied to the package. The World Customs OrganizationDetailed informationWe offerhereYou can search for a product’s HS code from here.

If you know the HS code of your product, you can add it to your Shopify admin screen.

Calculating VAT in Northern Ireland

Due to the UK’s departure from the European Union, Northern Ireland (NI) has adopted dual status and is considered to be part of both the EU and UK tax systems.

If you use Shopify Tax, VAT is calculated based on the origin and destination of your order. UK VAT applies to orders from within the UK to customers in Northern Ireland. EU VAT applies to orders from within the EU to customers in Northern Ireland.

UK, Northern Ireland VAT Claims Where your order will be delivered Where your order will be delivered VAT will be applied at checkout United Kingdom United Kingdom If you are UK VAT registered, you will be charged UK VAT. Northern Ireland If you are UK VAT registered, you will be charged UK VAT. European Union VAT is not charged. Northern Ireland United Kingdom If you are UK VAT registered, you will be charged UK VAT. Northern Ireland If you are UK VAT registered, you will be charged UK VAT. European Union If you are registered for EU VAT, you will be charged EU VAT. European Union United Kingdom Your VAT charge will depend on the cost of your order and whether you are UK VAT registered.

• If you are not UK VAT registered, you will not be charged VAT.
• If you are UK VAT registered and your order is over GBP 135, you will not be charged VAT.
• If you are UK VAT registered and your order is less than GBP 135, you will be charged UK VAT.

Northern Ireland

• If you are an EU One Stop Shop (OSS) registered or Northern Ireland VAT registered, you will be charged UK VAT.
• If you are registered for domestic VAT, you will be charged EU VAT at your local rate.
• If you are not EU registered, no VAT will be charged.

European Union If you are registered for EU VAT, you will be charged EU VAT.

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On July 1, 2021, tax laws regarding sales to EU member states have changed.

As of July 1st, country-specific limits no longer apply. After the change, a single limit will apply across the EU.

• Customers within your home country will be taxed at your local VAT rate.
• Taxation for customers in EU Member States outside their home country is determined by whether they exceed the registration limit.
  • If your total sales to other EU member countries are less than 10,000 euros, we will collect VAT at your home country’s VAT rate.
  • If your sales to other EU countries total more than €10,000, we will apply your local VAT rate and collect VAT on all sales in other EU countries.

One Stop Shop (OSS) will be newly introduced from July 1, 2021. The OSS system allows merchants to collect and remit VAT on sales in all EU member states without registering separately in each member state.

Merchants with locations in Northern Ireland (NI) use OSS rather than the Import One Stop Shop (IOSS) system. Due to the UK’s withdrawal from the European Union, Northern Ireland has adopted dual status and is considered to be part of both the EU and UK tax systems.

If you use Shopify Tax, VAT is calculated based on the origin and destination of your order. UK VAT applies to orders delivered from within the UK to customers in Northern Ireland, and orders delivered from within Northern Ireland to customers in the UK. EU VAT applies to orders shipped from within the European Union to customers in Northern Ireland, and orders shipped from within Northern Ireland to customers in the European Union.

Before you start setting up EU and UK taxes in Shopify

You must decide for yourself whether you need to charge taxes. If you have any questions, please consult your local tax authority or local tax advisor. Generally, if you sell to an EU member state, you will need to register to claim EU VAT with your local tax authority. If your sales to UK customers in a 12-month period are more than GBP 85,000, you will normally need to register to claim UK VAT.

If your sales into an EU member state exceed certain sales limits, or if you have a large-scale business in that country, you should register with the One Stop Shop (OSS) system or contact the respective relevant authorities. You may need to register. This process varies depending on where your business is located, where you sell to, and the requirements from each government. The requirements of the country in which you are registered to collect VAT will determine the rate you will be charged.

• Customers within your home country will be taxed at your local VAT rate.
• The applicable tax rate for customers located outside of their home country in the EU depends on whether the registration limit of 10,000 euros is exceeded.
  • If the limit is not exceeded, you will be charged at your local VAT rate. To charge EU customers at your local tax rate, you must take advantage of the tax exemption for microbusinesses.
  • If the limit is exceeded, you will be charged at your country’s VAT rate. To be charged at the destination country’s VAT rate, you must register your VAT registration number with the destination country’s OSS.

If you have a large business in a country, you should contact that country’s tax office to find out if you need to register to collect taxes. It is your responsibility to determine if your business exceeds the remote sales limit.

Claim VAT with OSS

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On July 1, 2021, tax laws regarding sales to EU member states have changed.

federated OSSThe One Stop Shop (OSS) system, also known as the One Stop Shop (OSS) system, allows merchants with locations in EU Member States or Northern Ireland to collect and remit VAT when selling to customers in other EU Member States, according to the requirements of the destination country. Applicable when absolutely necessary.

If your annual sales to other EU member states total less than 10,000 euros, you can choose one of the following:

• Take advantage of the tax exemption for microbusinesses and charge your local VAT rate.
• If you want to charge VAT for your location, register with OSS.

OSS is available only if your store uses registration-based taxes. If you haven’t updated your settings to use registration-based taxes, please manually update your tax rates using location-based tax rates.

Setting up UK VAT registration

Once you have registered with the tax authorities and been given a UK VAT registration number, you can set up your UK taxes.

procedure

1. From the management screen,[設定] > [税金と関税] Move to.
2. [国/地域] In the section[イギリス] Click.
3. Collection of VATIn the section[VATを徴収する] Click.
4. [VAT登録番号] Enter your VAT registration number. Leave this field blank if you have applied for a VAT registration number but do not yet have it. This field can be updated when obtaining a registration number.
5. [VATを徴収する] Click.

After you set up your tax region, you can create tax overrides for products that don’t have the default tax rate.

The tax preferences established for the United Kingdom will affect orders such as:

• Orders placed by customers in the United Kingdom and orders shipped from the United Kingdom, including Northern Ireland
• About Northern Ireland [マイクロビジネス対象の免税] is selected, orders to or from Northern Ireland merchants (will be charged at the merchant’s local VAT rate)
• [国別の登録] or [ワンストップショップの登録] is used, orders placed by a customer in Northern Ireland to a merchant located in an EU member state (charged at the customer’s local VAT rate)

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Tax overrides cannot be set for Northern Ireland alone. UK tax override affects all UK orders.

Set up VAT registration in the EU

Once you have registered with the tax authorities and been given an EU VAT registration number or a UK VAT registration number, you can set up your taxes in the EU.

procedure

1. From the management screen,[設定] > [税金と関税] Move to.
2. [国/地域] In the section[欧州連合] Click.
3. [EU圏内での販売にかかるVAT] on the page,[VATを徴収] Click.

4. Select your VAT registration method.

   • If you are registered with the OSS system and would like to claim a single VAT refund for all sales to customers in EU member countries,[ワンストップショップの登録] Select.
   • If your store has an annual turnover of EUR 10,000 or less and you wish to submit a VAT refund application to the competent tax authority,[マイクロビジネス対象の免税] Select. If you have multiple VAT registrations, the tax exemption for microbusinesses is not available.
   • If you wish to apply for a VAT refund directly to the tax authorities of the destination EU member state,[国別の登録] Select.

5. [次へ] Click.

6. Do one of the following:

   • [ワンストップショップの登録] If you select , from the country list [北アイルランドプロトコル] and enter your country’s VAT registration number.[VATを徴収] Click. If additional VAT registration is required,[EU圏内での販売にかかるVAT] on the page,[国を追加] Click.
   • [マイクロビジネス対象の免税] If you select , from the country list [北アイルランドプロトコル] and enter the VAT registration number provided by your country.[VATを徴収] Click.
   • [国別の登録] If you select , from the country list [北アイルランドプロトコル] and enter your country’s VAT registration number.[VATを徴収] Click. If additional VAT registration is required,[EU圏内での販売にかかるVAT] on the page,[国を追加] Click.

After you set up your tax region, you can create tax overrides for products that don’t apply the default tax rate.

The tax preferences established for EU member states affect orders such as:

• Orders placed by customers in EU countries and orders delivered from EU countries, including Northern Ireland.
• [国別の登録] or [ワンストップショップの登録] is used, orders placed by a customer in an EU member state to a merchant in Northern Ireland (charged at the customer’s local VAT rate).

Notice

If you are located in the EU or collect VAT on sales within the EU, we do not support collecting VAT on deliveries from outside the EU to customers within the EU.

Manage your VAT registration

If your store is located in Northern Ireland and you charge VAT to your EU customers as soon as Brexit-related tax laws come into force.[国別の登録] Registration will be done.[ワンストップショップの登録] or [マイクロビジネス対象の免税] You can change your registration.

procedure

1. From the management screen,[設定] > [税金と関税] Move to.
2. [国/地域] In the section[欧州連合] Click.
3. [EU圏内での販売にかかるVAT] In the section[VATを変更] Click.

4. Do one of the following:

   • If you are registered with the OSS system and wish to claim a single VAT refund for all sales to customers in EU member countries, select from the country list [北アイルランドプロトコル] Select[ワンストップショップの登録] Select and enter your country’s VAT registration number.[VATを徴収] Click.
   • If your store has an annual turnover of less than 10,000 euros and you wish to apply for a VAT refund to the competent tax authority,[マイクロビジネス対象の免税] from the country list. [北アイルランドプロトコル] and enter the VAT registration number given to you by your home country.[VATを徴収] Click.

5. [保存] Click.

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