Hi, I'm Jan and in this brief video I'm going to show you how to get your Shopify store ready for Brexit.
If you have a Shopify store in the UK or the EU,
you're probably wondering what Brexit means for your store and your customers.
In this video, we'll talk about the two Brexit scenarios
and what you need to do as a store owner to stay legally compliant in each case.
The original departure date was set for March 29th, 2019 but the EU agreed to postpone the Brexit date
because the British Parliament couldn't get the deal approved.
The so-called "divorce" deal, also known as a Withdrawal Agreement
sets out exactly how the UK leaves the EU but not what happens afterwards.
If it gets approved, a transition period has been agreed, giving businesses the time to adjust.
So what's stalling the departure?
Put simply, the British Parliament can't agree on the deal.
This could lead to something you may have heard of:
a hard Brexit.
So, let's have a look at these two possible Brexit scenarios and how they will affect your Shopify store.
If the Brexit withdrawal agreement is approved, the UK will remain inside the EU VAT regime
until the end of the December 2020 transition period.
In that case, there will be no major changes to the way VAT is charged.
All UK and EU stores will continue to charge VAT to all of their UK and EU consumers
and business customers will remain tax-exempt.
This means there will be no need for you to update your tax settings in your Shopify store just yet.
If no deal is reached, then a so-called "hard Brexit" will mean that you should no longer charge VAT
to some of your foreign customers.
Therefore you will need to make some changes in your Shopify store.
Let's look at two specific scenarios right now:
UK stores selling to the EU
and EU stores selling to the UK.
In case of hard Brexit, UK merchants will need to update their tax settings in Shopify
and may be required to include invoices with export documentation when shipping to the EU.
So if your Shopify store is based in the UK and you're selling to customers in the EU,
you will no longer charge them VAT.
Let me open up my Shopify dashboard
right now and show you how to set this up.
So now in our Shopify admin let's head over to settings, click on taxes,
and here we will need to remove VAT from every EU country besides the UK.
This means you need to click on each country one by one and change the VAT rate to 0%.
So let's click on Austria, change the country rate to 0%,
click save and go back.
Now let's click on Belgium and change the VAT rate to 0% as well.
Repeat this process for all the other EU countries until they are all marked as not charging
and you only have UK left at 20% VAT.
Bear in mind that your European customers will need to pay both customs duty and VAT at the time of import.
This might make your products less competitive on the European market.
All right, now let's look at you
merchants selling to the UK.
So, in the case of EU merchants, they will also similarly need to update their tax settings in Shopify
and be required to include invoices with export documentation when shipping to the UK.
So if your Shopify store is based in the EU and you're selling to customers in the UK,
you will no longer charge them VAT.
Once again, let me open up my Shopify dashboard and show you how to set this up.
Once again, in our Shopify admin let's go to settings and let's click on taxes.
In the case of hard Brexit, you will need to make sure the UK VAT is set to 0%
because you will no longer charge VAT
to British customers.
So let's click on United Kingdom.
In this example we're using a Shopify store based in Germany
where the current VAT rate is 19% which should now be changed to 0%.
So let's change the country tax to 0% and click save.
Now let's go back and scroll down to United Kingdom.
As we can see, we are no longer charging VAT to the UK.
With hard Brexit, there will no longer be any tax exemptions for UK business customers.
Therefore if you're using Sufio to tax-exempt business customers in your store,
it will automatically stop tax-exempting UK customers.
For non-European stores selling physical goods to the EU or the UK,
there will be no change in the way taxes are charged.
However, stores selling digital goods to the EU might be affected.
If your business is registered with the Mini-One-Stop-Shop scheme in the UK,
you will no longer be able to use their portal to report and pay VAT on sales of digital goods.
If you want to continue to use the MOSS system, you will need to register in a different EU country.
Regardless of the Brexit scenario, invoices remain vital documents
when selling to business customers and when shipping goods abroad.
Your invoices should display the correct tax breakdowns
and include all the required details about your business and your customers.
When selling abroad, these commercial invoices serve as export documentation.
You should keep copies of your VAT invoices and proof of export.
Sufio can automatically create professionally designed and compliant invoices
from orders in your Shopify store.
Apart from saving you time, Sufio also ensures that your business will abide
by the new rules when they come into place.
Whatever happens with Brexit, as a Shopify store owner it's important to keep a close eye
on the latest developments and make sure that your Shopify store is prepared for either outcome.
I really hope this video has helped you guys, but if anything still remains unclear,
leave a comment right down below and I'll personally get back to you.
Thanks for watching, I'm Jan and I'll see you guys in the next video.
