Go global in Shopify — and still get tax right

One of the biggest benefits of selling with Shopify is the ability to sell globally, providing customers with localized experiences no matter where they are thanks to tools such as translation, currency conversions, and more.

Whether you’re in the U.S. selling into Europe, in Europe selling into the U.S., or making other cross-border sales, reaching new international audiences can be great for growth. But it creates a whole new world of complexity when it comes to taxes.

Even if you’re outside the U.S., selling to customers in the U.S. subjects you to the sales tax laws of various states — if your transactions or revenue reach an economic nexus threshold in a particular state, you could be required to collect and remit taxes there. And if you keep inventory in one or more states, you might not even need to reach a sales threshold to trigger tax obligations.

Similarly, if you’re a U.S. company selling abroad, you likely have global tax obligations (even if you don’t realize it). Some countries have sales thresholds, but in a few, there’s no minimum — so if you just make one sale, you’re on the hook to collect and remit tax.

Of course, different states and different countries have different rules and regulations on taxability, rates, and more. And those rules change all the time. Even invoicing can present compliance hurdles, depending on the country. Add it all up, and there’s a lot to think about.

Three key tax challenges when selling globally

1. Getting tax right in different countries. Asked about their biggest challenges with selling globally, nearly half of sellers in a NAPCO Research survey cited difficulties calculating taxes and duties in different countries.
2. Navigating VAT. This consumption tax can vary subtly across different countries, and because it’s calculated and collected at each stage of the supply chain, there are many opportunities for error.
3. Drop shipping. If you don’t keep items in stock, but instead have a manufacturer or another business fulfill orders directly, things can get complicated very quickly. After all, each sale in this scenario is really two sales — one between the seller and customer, the other between the seller and manufacturer. It’s easy for the situation to get messy, because the tax is calculated based on how the items are used in both sales.

So how do you stay on top of these challenges — and the myriad others we don’t have room to get into here — when your business is growing in new markets that span the globe?

The Avalara for Shopify integration not only works right in the platform you already use, it works just about wherever you sell — and in places where you want to sell. With our powerful Avalara AvaTax solution embedded, you can get accurate calculations for over 13,000 U.S. sales and use tax jurisdictions, along with 192 VAT jurisdictions around the world.

The best part? It all works seamlessly, sending transaction data between Shopify and Avalara to calculate taxes and easily file returns. You can even manage tax-exempt sales — which present a huge audit risk — with Avalara Exemption Certificate Management.

Available features for international sellers:

• Tax content that covers over 190 countries, so you can stay compliant in the countries where you sell
• Upfront calculation and collection of duties, reducing customs delays and creating better customer experiences
• Up-to-date VAT and GST applications
• Managed returns, including VAT reporting and returns management
• Built-in, automated error checks to prevent costly mistakes
• Prebuilt connectors to leading ecommerce platforms
• Access to a suite of robust APIs so you can tailor solutions to your needs

Already selling around the globe? Looking to start growing your business across borders? Avalara for Shopify can help you navigate the complex world of international taxation more easily. Learn more about Avalara for Shopify here.