I'm a Shopify seller of digital goods using PayPal as a payment gateway. PayPal is currently calculating their fees on both the product price AND the VAT amount, which seems incorrect.
Why this matters:
- VAT is just a pass-through tax we collect for EU countries
- We don't keep this money - it goes directly to tax authorities. PayPal has no reason to factor it in to their fee structure.
- We're essentially paying fees on money that isn't ours
Example: If a product costs €100 + €20 VAT:
- PayPal should calculate fees on €100 (the actual sale)
- Instead, they calculate fees on €120 (including VAT)
Of course I understand that PayPal have their (massive) fees, but there is no reason to charge sellers on an aspect of the payment that they are not even processing. They should charge their fees based on the amount which they process (the product price) and pass on to us, not the tax which they do not process and which does not get passed on to us (again, we pay an expensive accountant to pass this on to individual countries).
Has anyone else encountered this issue or found a solution? The previous thread about this is archived and I'd like to revisit this discussion.
