VAT guide for Shopify stores in the UK in 2024

If your Shopify store is based in the UK, it is critical to understand how VAT operates within and between each country. However, navigating VAT rules can be a real headache. Coupled with Brexit and the Northern Ireland Protocol, it can seem like a minefield for the UK in particular. This video will walk you through UK VAT rules so that you can set up your Shopify store correctly.
For more information, take a look at our VAT guide for Shopify stores in the UK: go.sufio.com/vat-uk-shopify
VAT rates on different goods and services: www.gov.uk/guidance/rates-of-...
Sufio is the leading invoicing app for Shopify merchants worldwide, including the UK. Our powerful and automated solution makes invoicing easier than ever, leaving you with more time to focus on growing your business. Whether you’re about to launch your first ever store or you’ve already made it a household name, you can count on Sufio’s customer success team to help you configure both your invoices and taxes with compliance in mind.
Start your 14-day free trial today to experience the peace of mind automated invoicing provides: apps.shopify.com/sufio
⚠️ While we’re happy to make educational videos about setting up Shopify taxes, we encourage you to speak to a local tax authority regarding your tax duties.
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Here's what we'll cover in this video:
0:00 - Introduction
0:58 - Difference between the UK and GB
1:47 - Nothern Ireland Protocol
2:32 - When to charge VAT
4:03 - Selling within the UK
5:35 - Selling from the UK outside the UK and EU
6:00 - Selling from GB to the EU
6:30 - Selling from NI to the EU
8:42 - Selling digital goods
9:45 - VAT rules when selling digital goods
10:37 - Invoices for your Shopify store

[@josh_dgrimes]

Vert straight froward, clear and no-nonsense

[@Sufio]

Thank you! It's nice to hear that.

[@MrMorph1000]

Thank you for the excellent presentation :)

[@domingoscussinja7176]

Great video 👋

[@kameliakx9975]

thanks!!

[@user-vw9bb4lh2q]

thank you for sharing sir

[@Sufio]

You're most welcome! 🙏

[@Magic-Mi.x]

My supplier is from the US and I will be shipping internationally which would I be applying for

[@nakuls56]

Amazing video. Coincidentally posted just as I launched my Shopify store! Could you talk about UK to USA/Canada taxes?

[@Sufio]

Congratulations on launching your Shopify store! 👏 We're glad you enjoyed the video. While we don't have a tax guide specifically for sales from the UK to the USA/Canada at this time, we're always looking to create new Shopify guides. We'll definitely take your suggestion into consideration. Keep an eye out for updates and thank you for watching!

[@danieledepaolis5259]

Hey Jimmy. I have a question on metafields for products. I have 1 SKU with different prices. Below the original price it lets me decide if I want to charge the tax on top of the price, by checking the box. But it doesn't let me to do the same for the each of the prices that I set up with metafields. The problem is that, I don't want to charge tax on the original price, but I do want to charge the tax on the metafield price. Do you know can I solve this? Thanks in advance!

[@Sufio]

Hey @danieledepaolis5259! 👋While metafields are indeed powerful tools for capturing additional product data, they typically aren't designed to override default price fields or tax settings in Shopify. If you're aiming to achieve a specific customization, consulting a Shopify Expert might be your best course of action. You can find them here: experts.shopify.com/.

[@Tristan7086]

Excellent video! I am not VAT registered as I am only selling within the UK and my sales are below £85k. My question is: In 'setting>taxes and duties', should I uncheck every box in 'decide how taxes are charged?' The option 'include tax in prices' was selected by default. I don't understand what this means. Any help would be appreciated.

[@SWAMPCLO]

I would like to know this also

[@Sufio]

Hi Tristan! If you are not VAT-registered, you are not required to charge tax on any sales, regardless of your customers' location. Therefore, you should uncheck all the checkboxes in the "Decide how tax is charged" section. Once you begin charging tax, you can use this setting to determine how prices should be calculated in your Shopify store.

[@aa-kl1rj]

How long you selling Can you tell me which tool you use to find winning product 😊

[@user-bq7cm6fm1l]

Can I use the One-Stop Shop (OSS) Union scheme, even if I don’t live in a country that is a part of the European Union?

[@Sufio]

Absolutely! You can use the One-Stop Shop (OSS) Non-Union scheme if you're not based in the EU. This scheme allows any taxable person without a business establishment or fixed presence in the EU to register in any Member State of their choice for VAT purposes. The VAT identification number you receive will be specifically for declaring transactions covered by the Non-Union OSS scheme, which also makes handling VAT across multiple EU countries much simpler. Hope that helps!

[@user-bq7cm6fm1l]

Hi Djimi, thank you so much for making these videos. I might register a ltd. company in the UK, without being physically present as I live in North Macedonia, that's in Europe but not part of the European Union, and I plan to sell digital products like digital planners, digital stickers and fonts all over the world from my Shopify store, including USA and EU. Does that count as selling from the UK to EU? Even though I will not even visit UK, I will operate my Shopify store from my own country (but will have to set the country of the store to the UK in that case), I will be VAT registered in my own country once I reach the threshold, it's just that the ltd. company will be registered in the UK. If I ever reach the UK VAT threshold, I will register there as well. I am still considering if this is an option for me, but if it is, will the rate of the VAT be 0% when selling to countries outside of the UK?

[@Sufio]

Hello there! Thank you for your comment. When operating a UK-registered company that sells digital products such as planners, stickers, and fonts, VAT considerations do differ based on customer location. For business-to-business (B2B) sales within the EU, these services are generally considered outside the scope of UK VAT, as the place of supply is the customer’s location in the EU. Therefore, no UK VAT is charged on such transactions. However, for sales to EU consumers (B2C), UK VAT rules will apply until you reach the VAT threshold. Once you surpass this threshold, you will be required to either register for VAT in each EU member state where you have customers or use the VAT One Stop Shop (OSS) scheme to handle VAT across the EU. This allows you to register for VAT in just one EU member state, simplifying the process. Regarding sales outside the EU, including the USA, UK VAT is not generally charged. Instead, you should consider the local tax rules of the countries where your customers are based. As you are considering this business structure, consulting with a tax advisor would be beneficial to ensure compliance and optimize your tax strategy. They can provide specific guidance based on the most current regulations.

[@rsingh9969]

Hi, I am just starting to look into dropshipping, haven’t made any sales yet just wanted a better understanding of all moving parts i.e taxing Is VAT required to be paid if the drop shipping suppliers warehouse is based outside of the UK and the customer is in the UK? As a beginner, would you recommend I not register a business just yet and start making sales to see if it’s a viable business model for me and then later start looking into the taxes?

[@1jackofdiamonds]

Make sales first

[@Sufio]

Hey there! If the dropshipping supplier's warehouse is based outside of the UK and the customer is in the UK, it is no longer just about VAT. They may have to pay customs fees such as import duties, taxes, and handling fees. As this may vary based on the product you're looking into selling, it's always a good idea to do your research and seek professional advice from a certified tax consultant. Regarding registering your business, it ultimately depends on your personal circumstances and preference. If you're just starting out and not sure if dropshipping is a viable business model for you, it may be worth testing the waters first before committing to registering your business. However, it's important to keep in mind that you may still need to comply with tax laws and regulations, even if you're not registered as a business.

[@liam639]

Hi Sufio, I am about to cross the revenue threshold in the EU for VAT. I'm wondering if there is a way to show "Prices include VAT" to just EU customers though? Because obviously I don't want to have people in the UK (where I'm not registered for VAT) thinking they can claim 20% of their cost back because they saw "Prices include VAT". Hope this makes sense. Do you have a solution for this by any chance? Thanks.

[@Sufio]

Hey Liam! Unfortunately, Shopify doesn't have a built-in solution to display prices with or without tax based on your customers' location. However, there are third-party apps that may be able to assist with this. It might also be worth reaching out to Shopify Support for further guidance. In the meantime, you could consider adding a message to your product pages to let customers know that prices may or may not include VAT depending on their location at checkout. Shopify will calculate the respective tax rate based on your tax settings.

[@Five30s]

Hi Liam I was just wondering how dropshipping has worked out for you as I am soon to start. Also did you find a solution for the issue which you had faced as I was wondering the same thing

[@liam639]

@@Five30s Hey man, yeah it worked. It’s what I’ve been doing since late 2018. I do it for a living now lol. It’s a grind and it’s harder than ever right now but it can still work. I’ve done a few million in sales and have money like I’ve never had before. It’s a great opportunity. With that being said, it is harder than ever. Customers know to look elsewhere for cheaper prices. Customers know what dropshipping is. There’s more competition than ever. But there’s still money to be made no doubt. Hope this helps a bit

[@Five30s]

@@liam639 thanks for the advice. I’m in the UK so would you recommend dropshipping in the UK or the US and also do recommend buying a course.

[@liam639]

@@Five30s No problem. UK has always been the best country for me. Probably 70%+ of my overall revenue has been from the UK. Then 15% US and the rest in the EU, AUS etc. If you sell in the UK though, just be aware of VAT stuff. Same with everywhere really. You pretty much have to pay sales tax and/or VAT everywhere. In regards to buying a course, I don't think it's necessary. The main thing you actually need to be doing is getting experience yourself. Dropshipping is trial and error. I've launched hundreds of products. And only 5 have ever worked for me. But with those 5 I've been able to do £millions in revenue. So just keep going until you get something. And with every product test, look back on what could have possibly gone wrong. Could your product description been better? Was your site 100% working? Do you have enough scarcity on your product page (i dont use timers or anything though)? Is it clear enough what the product is? Could your ads have been better? Etc. Also look at competitors and work off what they are doing. If you know someone is doing well with a product, check out their description, take ideas from their site and use it to your advantage. Also chatgpt is really good these days. From 2018-2023 I was writing all my own product descriptions etc, it would take forever to come up with something. Now chatgpt does it in 30 seconds lol. To go back to the course thing, I have only ever bought 1 course. And it was a product research course. It helped a lot but I could've found the info on youtube. The layout of the course just made it easier to understand. Also spend time in dropshipping discords. Ask questions. Read what other people are having issues with and take a look at the advice they're being given. Also make connections. If you know someone who is doing well, message them. Most people are helpful. But there are a lot of pricks lol. Another thing, if you do get close with people, you'll find that most people just use cracked versions of courses. So you'd probably be able to find some cracked courses instead of paying for them. Wouldn't really recommend doing that 100% but it's up to you. Sorry for the huge type up. I know what it's like to be starting with this so I thought I'd just give you as much info as possible. I really hope this works out for you.

[@KaoussouC]

Amazing video! Could you extend it to sales from the UK to the USA? I also heard that Germany was very specific with VAT!

[@Sufio]

Thank you, Ibrahim! We've tried our best to cover sales from the UK to the USA in our Selling from the UK outside the UK and the EU part. Is there something specific you're looking for? For Germany, it's best to follow the EU tax legislation. Our new EU tax guide should answer some of the most common questions; however, if there's something else you need help with, don't hesitate to reach out! Selling from the UK outside the UK and EU: kzbin.info/www/bejne/Z6HLk5KcZd12d80 How to set up EU taxes in your Shopify store in 2022: kzbin.info/www/bejne/jIC7dXmLoJerrLs

[@falcieridesigns]

@@Sufio You mention VAT selling UK to USA as being at a zero rate. But this is not the same as US taxes which are chargeable in all states at different rates. How does a small UK business sell to the US and not have to collect and remit taxes themselves back to the state. Is there a go between which is like EAS or the Royal Mail recommendation Taxamo. I am only on the Shopify basic package and Shopify will not collect taxes for me. Is there a third party go between?

[@Sufio]

​Hey ​@@falcieridesigns​! You are correct that VAT is not the same as US taxes, which are chargeable in all states at different rates. However, please know that if you are selling from the UK to the US, you do not need to collect and remit taxes to the US states unless you have established a physical presence there (such as a store, warehouse, or office).

[@falcieridesigns]

@@Sufio I am confused. Surely if I post something to the US the buyer will be charged on receipt where relevant, at least that is what everyone tells me? And if that's the case why does Etsy collect sales tax from me for every sale I make to someone in the US?

[@Sufio]

Hey @@falcieridesigns! I understand that navigating international tax regulations can be confusing. To clarify, when you sell from the UK to the US, the buyer may be charged import duties or taxes on receipt of the item, depending on the value and type of the goods. However, as the seller, you are not required to collect or remit US sales tax unless you have established a physical presence in a state. This means that if you're a small UK business without a physical presence in the US, you are not required to collect and remit US sales tax. Regarding Etsy, it's possible that they are collecting sales tax on your behalf due to recent changes in US tax laws. They may be required to do so as an online marketplace, which is different from selling directly to a US customer. If you have any further questions, I recommend getting in touch with a licensed tax consultant as they can provide specific guidance on your tax obligations based on the goods you're selling.

[@fratsarap9727]

Hello, I am an online seller based in Poland, operating under a company from the UK and running a Shopify store focused on the UK market. My products are physical goods. I ship some of my products from Poland to both other European countries and from Turkey to Europe, America, and worldwide. Additionally, I use fulfillment services in the UK to send products to customers there. I haven't surpassed either the 10,000 euro threshold or the 85,000 pound threshold yet. In this scenario, is it important to consider where my products are sent from or where they are sold? Should I calculate all my sales as if they were dispatched from the UK, taking VAT rules into account accordingly? If so, or if not, should I register for VAT in the UK or any other country in my current scenario, and should I charge customers for this? I've been searching extensively for a clear answer to my question but haven't found one. I would greatly appreciate your help. Regards.

[@Sufio]

Hello! Thank you for sharing your situation in detail. In your case, both the location from which the products are sent and the markets where they are sold are important. Since you operate under a UK company and focus on the UK market, and use UK fulfillment services, you should generally account for VAT as per UK regulations. However, because you also ship from Poland and Turkey to various regions, you need to consider the VAT rules applicable in those countries as well, especially for sales to other EU countries and beyond. Given that you haven't surpassed the VAT thresholds for distance selling in the EU or for the UK, you may not be required to register for VAT immediately. However, registering voluntarily could allow you to reclaim VAT on business expenses. It's crucial to get tailored advice based on your specific business model. We recommend consulting a certified tax advisor who can provide guidance based on the latest tax regulations in both your target markets and the countries you ship from. This will ensure you remain compliant and optimize your tax obligations. Hope that helps!

[@ChristComfort]

Thank yo!! MAY THE LORD JESUS CHRIST, pull you into his blessing brother!

[@Sufio]

Amen!

[@andra1110]

This couldn't come at a better time

[@Sufio]

We're glad to hear it! Our team are always available to discuss any queries you may have, so get in touch when you need it :)

[@grgrochak]

If my company is registered in the UK and uses a 3PL in EU for all EU orders, would I have to charge VAT for these orders?

[@firatbaykaldi]

+1

[@Sufio]

Great question, @grgrochak! Generally speaking, when using a third-party logistics provider (3PL) in the EU, you become a deemed supplier. This means, for VAT purposes, you're considered to have both received and supplied the goods yourself. If the value of the goods per consignment doesn't exceed €150, you can opt to register in the Import One Stop Shop (IOSS). This allows you to handle VAT across all 27 EU Member States with just one registration. However, if a single consignment exceeds EUR 150, IOSS isn't applicable, and you'll need to explore other VAT compliance options. If you decide to use the IOSS, you'll need to appoint an intermediary who will handle your registration in the Member State where they are established. At the point of sale, you should charge the VAT rate applicable to the goods in the destination Member State. In your case, the specifics of how you work with your 3PL in the EU could significantly affect your VAT obligations. For instance, it matters whether you send goods from the UK to the 3PL or if the goods are purchased within the EU and then transferred to the 3PL. This detail can affect whether you need to charge VAT and how much. Since VAT regulations can be complex and vary based on specific business arrangements, I highly recommend consulting with a certified tax consultant to ensure you're fully compliant with the laws applicable to your situation. They can provide tailored advice suited to your business model.

[@grgrochak]

@@Sufio thanks for your detailed answer. the goods would be sent from Uk to the 3pl. Would I have to charge vat for that?

[@busracel]

Thank you for the informative video! I'm new to dropshipping and haven't made any sales yet. I've established a business in the UK, but I currently don't have a VAT number. My dropshipping supplier's warehouse is primarily located outside the UK, mostly in China. My main target markets are the UK and USA. As a beginner, would you advise against registering for VAT at this stage? If I don't have a VAT number, does that mean I don't need to collect VAT for now? What would be my responsibilities in this situation? Your guidance would be greatly appreciated.

[@Russian382]

do you have answer for that, I'm Chinese and I created a UK company to use Stripe, I don't know if I need to have a VAT number, because I only sell product to the US

[@Sufio]

Thanks for your comment and kind words, @busracel! When it comes to VAT, it's crucial to take into account your specific business situation. In the UK, you generally need to register for VAT if your turnover exceeds £85,000. However, you can also register voluntarily before reaching this threshold. Early registration has its advantages, such as credibility, but it may come with higher costs for your customers since you'll have to start charging VAT. Additionally, since your supplier is located outside the UK and you're selling internationally, you need to consider import VAT and international taxes. Tax laws are complex and subject to change, so I strongly recommend consulting a qualified tax advisor or accountant who can provide tailored advice for your situation. Best of luck with your dropshipping venture!

[@fabian546]

If you are using dropshipping software such as AutoDS or Zendrop you should not worry about import VAT and International taxes. If your products come from an independent manufacturer in China, make sure the shipping is Door-to-Door DDP. Which means that the manufacturer will pay all import and customs duties for the product to reach the customer's door.

[@Magic-Mi.x]

Hi I am based in the UK but my supplier is in the US so I'm very curious on which one I would have to be registering for if you could get back to me on this that would be great thank you

[@Sufio]

Hello @Burnettles! As you plan to import goods from the US, it’s important to know that US sales tax won’t apply. Instead, UK tax rates will be charged at the point of import. Given the complexities of tax regulations, we strongly recommend consulting with a qualified tax advisor. Sharing specific details with them, such as whether the goods will be directly shipped to consumers and the locations of these consumers, will help ensure that you receive the most accurate guidance. All the best on your ecommerce venture! 💪

[@Magic-Mi.x]

@Sufio the goods will be shipped directly to consumer

[@DariusBMW]

who can hellp with tax registerd in UK I just start and I dont know how it works

[@Sufio]

Registering for VAT in the UK should quite straightforward. Take a look at the official UK GOV website for more details: www.gov.uk/register-for-vat/how-register-for-vat

[@rkent06]

I like your silly glasses

[@Sufio]

Thank you! 😉