Hello, I’m based In France and I sell online French lessons to private customers in the UK. I have exceeded 10,000 euros and I have received a message from shopify that I have exceeded the cross-border VAT threshold in the EU. I understand that a 10,000 euros excess between EU to EU countries is relevant but since Brexit, the UK is not part of the EU anymore. So, this notification doesn’t apply to my business. Does anyone know how I can resolve this issue, please?
Hi @GNav
You are correct. The €10,000 EU sales threshold does not apply to your sales to the UK. You can disregard the specific Shopify notification as it is likely an automated alert that does not correctly differentiate the UK from the EU.
However, the UK has its own separate tax rule for digital services like yours. For overseas businesses selling to UK consumers, there is a £0 sales threshold. This means you are required to register for UK VAT and begin collecting it from your very first sale.
To fix this, you must first register for VAT with the UK’s tax authority (HMRC). Once you have your UK VAT number, go to Settings > Taxes and duties in your Shopify admin, select the United Kingdom, and enter your VAT number. Shopify will then automatically add and collect the correct VAT on all future UK sales.
Because tax laws are complex, it is highly recommended to confirm this process with a tax professional to ensure you are fully compliant.
Hope this helps!
Hi PieLab,
Thank you so much for you reply. This is very useful. Since I sell live classes, lessons over the internet and according to the HRMC link below (see section “services not affected by these rules”), file:///Users/gerard/Desktop/VAT%20rules%20for%20supplies%20of%20digital%20services%20to%20consumers%20-%20GOV.UK.html
I have good reasons to believe that I don’t need a VAT number and therefore, as you rightly said, this EU cross-border VAT threshold notification is just a Shopify automatic message. Thank you again for your time and expertise.