Do you pay VAT on Shopify fees?

Accounting for VAT with an e-commerce business is a minefield of rules on fees, international transactions and other areas. But completing your returns needn’t be stressful. In this article we’ll walk you through VAT on Shopify fees; information all e-commerce business owners need to know.

Bricks and mortar retail stores had it easy in terms of VAT, but the digital age is in full swing, which means VAT needs to be accounted for in whole new ways. We’ve already shown you how to account for your product samples and gifts and today we’re going to zone in on the aforementioned frequently asked question on VAT treament for Shopify Fees.

VAT on Shopify Fees for the UK

There is no VAT on UK Shopify fees, but it is accounted for as a 20% reverse charge. 

While that information is surprisingly hard to come by, Shopify confirms that taxes on their fees are only taken in Canada (where they are registered). If your business is registered in the UK, there is no VAT to be paid on Shopify fees and it has a 20% reverse charge tax treatment.

The United States (US)

Taxes on Shopify fees vary in the US, with particular states and jurisdictions being taxed, while others are tax-free. You can find the full list of US jurisdictions here.

Australia

If your e-commerce store in registered in Australia, your business will be charged a 10% Goods & Services tax or GST.

Ireland

While not on the initial list of taxed countries, an amendment in June 2019 means that if your store is registered in Ireland, then you’re charged 23% VAT on relevant Shopify fees.

VAT Registration and Shopify

While there may be no VAT on Shopify fees, it is important to indicate on your Shopify account if you are registered for VAT, so your transactions will be correctly accounted for. If you’re not sure if you should be registered for VAT then make sure to keep an eye on your expected turnover and add your VAT details to Shopify and other relevant apps when you do register for VAT.

Find out the VAT on Shopify Fees
Shalom Mwenesi

What next?

If your VAT returns are still causing you a headache, help is at hand. We will make sure your accounting is stress-free, clear and insightful as we are experienced e-commerce accountants. Get in touch with our team today, and we will be glad to assist you.

The best time to start is now.

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