We are a Swedish app developer company. We have launched a Shopify app about 1 year ago on M:AI User‑Friendly Site Search - Supercharge your product search & filters with a helpful AI | Shopify App Store and are now gaining some customers.
We have Partner ID **3198720**
Our accounting firm has a question that we need your help to answer regarding how to pay tax, no tax, or reverse tax.
**Background**
- We only sell our app to other companies (using Shopify), never to private persons. We have around 15-20 companies as customers.
- We do not get paid by the companies for our Shopify app, only directly from Shopify, and we only use your built-in simple Shopify App Pricing that we suspect handle all tax questions for us? “Managed pricing”
> We are a Swedish, EU-based company, and when we BUY services from other big US-based (or Canada based) companies we never pay tax, ie. DigitalOcean or Github.
On the invoice for payouts from Shopify it never mentions tax. We don’t get a separate taxinvoice either from Shopify, nothing. We also did an export of payouts to an Excel-file using Partner dashboard and the only column saying anything about tax is “Tax description” and it’s empty on all rows.
Now to my question, from our accountant firm:
Shopify is a Canada-based company, not paying us any taxes (like VAT).
How do we in Sweden treat your payouts?
- Are they tax free?
- Is it reverse tax?
To handle this correctly, we need to know if we do business directly with each company subscribing to our app? (But we don’t get any company information such as VAT-number through Shopify)
Or do we NOT do business directly with each company and only do business with Shopify that makes the payouts? Is Shopify not selling our app, or do you just “mediate” our app to the company’s…
It’s kind of hard to explain in detail what I mean, I hope you understand anyway this question on how to handle VAT from Shopify payouts to our accounting firm.
This is what AI says:
Shopify says that TaxTransaction entries are rolled up per payout, and that for sale transactions such as app subscriptions, Shopify can charge Partner tax on the fee collected for brokering the transaction. That means tax-related adjustments exist in the payout model, but they may only appear in the underlying payout transaction data rather than as an obvious “tax” row in the summary you are looking at.
So if you don’t see tax on payouts, the most likely explanations are:
- No Partner tax was applied to those payouts
- Tax was handled on the merchant-sale side by Shopify, so it doesn’t show as a deduction from your payout
- Your payout view is summarized, and the tax detail is only visible in the detailed Partner transaction data
Why should we then pay tax when we get PAID from big US-based (or Canada-based) companies?