How To In A Hurry: E-commerce Operators & BREXIT

Hello, Shopify Partner here.

Just intending to share some ideas regarding Brexit and plausible scenarios for any Shopify store controller/owner/developer.

Having some Shopify store in the UK or an EU country?

Worried about what the "breaking up" between UK and EU means for store and customers?

What Brexit really means

We can't say British politicians have been doing nothing more than arguing over after the UK voted to leave the EU, three years ago.

The Withdrawal Agreement is even lacking of some route map about what happens afterwards; and that affects to a friggin' LOT of trading deals and regulations.

Even worse: the UK government can’t agree on the deal. This would lead into some hard Brexit. Economy could get seriously affected.

SCENARIO 1: "Soft" Brexit

If the Brexit withdrawal agreement gets UK parliament approval, the UK will remain inside the EU VAT regime until the end of the December 2020 transition period, and if no free-trade agreement is concluded by the end of 2020, transition period will get extended two more years.

UK and EU stores should continue to charge VAT to all EU and UK consumers, and business customers should remain tax-exempt.

In short: if the Brexit withdrawal agreement is approved, forget about touching tax settings in your Shopify store.

SCENARIO 2: Hard Brexit

UK’s relationship with the EU reverts back to World Trade Organisation (WTO) terms.

This means no longer charging VAT to some foreign customers. UK and EU merchants will have to update tax settings in Shopify, and also be prepared to include invoices with export docs when shipping abroad.

- UK store selling to the EU

Is your Shopify store UK based? Then go to your Shopify admin, go to tax settings and remove VAT from every EU country from the list: set tax rate for each EU country to 0%.

Keep the tax rate for the UK at 20%.

Any European customer will need to pay both customs duty (where applicable) and VAT at the time of import. This gives a negative cash flow impact on your business customers, so your products are less competitive on the European market.

And you'll have to get familiar with new rules for conducting business overseas, and if shipping outside the UK, what export docs you need.

EU stores selling to the UK

For a Shopify store based in the European Union (EU27), VAT charges to UK customers are out.

In your Shopify admin, go to tax settings and set tax rate for the UK to 0%.

Tax exemptions for UK business customers also dissappear.

Non-European stores selling to the EU and UK

For non-European stores selling physical goods to the EU or the UK, no change in taxes.

But stores selling digital goods to the EU, if registered with the VAT Mini-One-Stop-Shop in the UK, you will no longer be able to adhering nor using it to report and pay VAT.

If you want to continue to use the MOSS system, get registered in a different EU27 country.

Hope it helps!