Registration-based taxes in Canada
If you're already using Shopify to sell in Canada, then you can update your store to use the new Canadian sales tax features. If your store is eligible to be updated, then a banner appears on the Taxes page prompting you to update your tax settings. When you click the Update tax settings button, you're asked to provide a tax registration number. After you've added this number, Shopify automatically sets the tax rates that apply provincially and federally in the areas you've registered for.
Shopify Support can help you with your tax settings in your Shopify admin, but you'll need to make some decisions yourself (or with the help of a tax professional). We're not able to provide legal tax advice. If you're encountering any trouble changing your settings, you can contact Shopify Support for help.
Do I need to register for a tax number?
That depends on your business. In general, Canadian merchants need to register for a GST/HST account if both of the following are true:
- You sell or lease taxable products or services.
- Your worldwide revenue is more than 30,000 CAD over the past four consecutive calendar quarters.
If your store is not based in Canada, then generally you need to register for a GST/HST account if both of the following are true:
- You sell taxable products or services to customers in Canada, and fulfill those orders from a warehouse located in Canada.
- Your revenue from taxable orders in Canada is more than 30,000 CAD over the past twelve months.
If either of the preceding cases applies to you, then you might need to collect taxes on your sales, remit those taxes to the appropriate tax authority, and file regular reports with the tax authority. If your sales are lower than the threshold, then you don't need to register for a GST/HST account, and you don't need to collect or remit taxes.
If a province where you sell products and services charges a provincial sales tax (PST) separately from the goods and services tax (GST), then you might need to register in that province, too.
If you're not sure whether you need to charge sales tax, then consult with a local tax accountant or other tax specialist, as well as with provincial and federal tax agencies.
How do I know if I need to register at the provincial level?
The provinces that charge a separate provincial tax are British Columbia, Manitoba, Quebec, and Saskatchewan. These requirements vary depending on the province. For more details, refer to Canadian taxes reference.
For example, you might need to register if you operate or advertise in those provinces.
I need to register. What do I do?
After you've registered, add your tax registration number on the Taxes page.
On the Taxes page, click Update tax settings.
On the Canada taxes page, enter your account number for each type of tax or region that applies.
For each region in which you're not registered, click Not registered.
I don't need to register. What do I do?
If you've determined that you don't need to charge Canadian taxes, then go to your Taxes page and select the Not registered to charge option. Selecting this option will ensure that you're not charging tax in your store.
This option is recommended rather than setting your customers as tax-exempt or setting your products to be tax-free. If you don't need to register to collect taxes now, then you might need to in the future. Entering a registration number is much easier than having to change your settings for customers or products.
Will I be able to override tax settings?
Yes, with some restrictions. You're able to override settings that apply to your store specifically - that is, only those that you've entered registration numbers for. For more information about how Canadian tax overrides are affected when you update, refer to Canadian tax override requirements.
Where can I go for more help?
Shopify support is able to help you with how to change your settings, but can't advise you on if you should change your settings. If you need help determining if you should register with tax agencies and charge taxes to your customers, your best resource is a local expert such as an accountant or financial advisor. You can also reach out to individual tax agencies directly.
What do I need to know about Brexit?
If you sell to customers in the UK, then the best way to get information about how Brexit affects your business is by contacting a local tax professional. As a starting point, the following are some of the new laws that apply to merchants who sell to customers in the UK:
- You might need a UK EORI number.
- The UK VAT laws that came into force on January 1, 2021 result in new VAT requirements for sales equal to or less than 135 GBP.
- If the sale of goods is equal to or less than 135 GBP, then you must register for VAT in the UK. In this case, VAT is collected at the point of sale and remitted by the merchant. If you use registration-based taxes and have a UK VAT registration, then VAT will be applied to your sales to customers in the UK.
- If the sale of goods is over 135 GBP, then you might not be required to collect VAT at the point of sale. In this case, VAT and duties are remitted by the importer. If you use registration-based taxes and have a UK VAT registration, then VAT will not be applied to your sales to customers in the UK. If you choose to, you can charge your customer for VAT and duties at the time of sale, and then provide these funds to the shipper or importer using a shipping label. Alternatively, you can send the orders without charging VAT and duties, and your customer will pay extra funds at the time of delivery. Learn more about handling VAT and duties.
What do I need to know about selling in the EU?
When merchants outside the EU ship orders to customers in EU member countries, then the following import and duty rules apply:
- For orders that are equal to or less than 150 EUR, VAT is applied.
- For orders that are greater than 150 EUR, import VAT and duties are applied.
If you don't charge VAT and duties during the checkout process, then your customer pays them to the shipping carrier upon delivery.
If you want to collect VAT at checkout, then you need to register for a VAT number. To help you manage the complexity of registering for a VAT number, reporting your sales, and remitting VAT, the EU has introduced the Import One-Stop Shop scheme (IOSS). If you're not sure whether you should apply to the IOSS, then contact a local tax professional.
After you receive your IOSS number, you need to add it to your tax registration in your Shopify admin. Before you add your IOSS number to your tax registration, make sure that you've set up a shipping profile for the European Union.
- From the Shopify admin, go to Settings > Taxes.
- In the Tax regions section, beside European Union, click Manage.
- In the Shipping to the EU section, next to VAT on sales to the EU, click Collect VAT.
- From Registration country, select the country where you registered for IOSS.
- In IOSS VAT number, type your IOSS number.
- Click Collect VAT.
I've updated my tax settings. Why am I getting different tax amounts?
In some orders, you might notice a small variance in your total tax amounts after you've updated your tax settings. This variance is due to tax amounts being rounded at the line-item level, rather than at the invoice level. You can learn more about rounding calculations in Managing your Canadian taxes.