I build apps for the Shopify App Store and receive monthly payouts from Shopify International Ltd. (Ireland). My tax adviser now tells me the real contractual partners aren’t Shopify at all, but every single merchant who is billed and is paying for the app. The argument (based on § 3a (2) German VAT law, but relevant in any VAT/GST country) is:
Shopify’s invoice only shows “Payment”, they forward the money but aren’t the buyer.
Because the merchant is the actual buyer, I must charge VAT/GST according to the merchant’s location:
19 % German VAT for German businesses,
Reverse-charge for EU businesses with a valid VAT ID,
OSS or local rules for non-EU or B2C cases.
This seems to clash with Shopify’s own help page, which implies Shopify itself is the customer and the payout is a B2B service to Ireland (reverse charge, no German VAT).
Questions
Has anyone here been audited or obtained an official ruling that confirms either interpretation?
If you treat each merchant as the customer:
How do you get reliable VAT ID / location data when the Partner payout report doesn’t include it?
Do you issue separate invoices outside the Shopify system?
Any official Shopify doc or government guidance I’ve missed?
Hey @Pama, I can’t offer specific tax advise, but what I would recommend is to have your tax and legal professionals look over the current partner agreement..
Hopefully some other partners will follow up here with their specific experience.
I’ve pored over the Partner Terms, especially section 4 on billing, and I still can’t find anything that clearly says whether Shopify or each merchant is the actual buyer of an app for VAT/GST. The language just makes Shopify sound like a payment middle-man who passes the money along.
Because my VAT treatment depends entirely on who the real buyer is, even one plain sentence in the docs would clear things up. And in Germany that extra 19 % really stings.
Maybe I’m missing something, but for now I’ll hope someone from the EU jumps in and shares how their accountant or auditor handled it.
There are two additional partner-facing docs worth reviewing:
Taxes on Partner sales breaks down how taxes are handled across app/theme sales, service fees, and referrals, including where Shopify calculates and remits taxes on your behalf (based on jurisdiction and business presence) versus where the responsibility falls on you.
How to earn as a Shopify Partner goes into how taxes on earnings are recorded in invoices and explains the Regulatory Operating Fee for countries with Digital Services Tax.
Since tax obligations can vary depending on the type of services you offer and where your business is registered we recommend discussing specific tax questions with a local tax professional.
Your tax obligations are different depending on the type of services that you offer and where your business is registered. It’s recommended that you discuss any tax issues relating to your business with a local tax professional.
I had the following chat with the Shopify support:
me: As far as I have consulted with my accountant, VAT payment applies only to customers from Europe. In this case, the payment documents must include the customers’ tax identifiers and their country. Could you please tell me if this information will be included in the payout documents?
me: Also, could you clarify whether VAT will be automatically withheld from customers in Europe in this case?
support advisor: As a partner selling Shopify apps, you’re essentially selling your app to Shopify, which is based in Canada. The location of the merchants purchasing the app doesn’t matter in this transaction, as they pay Shopify directly, and then Shopify pays you.
So it looks like we should not take VAT into account, as we sell apps to Shopify and not to end customers. Am I missing something?
@KyleG-Shopify Could you confirm whether Shopify officially takes the position described by support? I couldn’t find any wording in the Partner Agreement indicating resale, license transfer, or that Shopify acts as the merchant of record, unlike Apple and Google.
For the authoritative source I’m going to lean in to our public documents here. The two docs to go off of are:
Taxes on Partner sales is the most directly relevant one. It covers how taxes are handled across app/theme sales, service fees, and referrals, and clarifies the conditions under which Shopify calculates and remits taxes to local tax bodies on your behalf (based on whether Shopify has a business presence in the merchant’s jurisdiction and whether the local tax body requires it). It also covers joint election forms for certain jurisdictions.
Shopify billing and tax responsibilities that is referenced by the above doc, covers the jurisdictions where Shopify has a business presence, which is relevant context for the app/theme sales section.
As both docs note:
Your tax obligations are different depending on the type of services that you offer and where your business is registered. It’s recommended that you discuss any tax issues relating to your business with a local tax professional.
Given the complexity here especially across EU jurisdictions, a tax professional who knows your specific business registration, the services you offer, and the applicable local law is going to be the right person to give you a definitive answer.