Managing Returns, Discounts, and double payment of VAT in Shopify

This document provides comprehensive guidance on handling returns, post-sale discounts, and double payments of VAT for IOSS in Shopify

Table of contents
 

1. Return or Exchange Handling
2. Post-Sale Discount Handling
3. Handling Double Payment of IOSS VAT

Return or Exchange Handling

For VAT purposes, a return or exchange of IOSS items is considered complete only when the items are physically returned to your store from abroad. In Shopify, this translates to restocking items within the store. EAS automatically detects restocking and initiates the necessary steps to claim VAT on the returned goods.

If an order is returned by the logistics provider or customer, regardless of the reason, you must perform a return in your Shopify store. Return can be performed with and without refund. Naturally,  orders that are  refunded are clear cases of returns and if you want to send other items to the customer in exchange of returned items the case becomes an order exchange.   

To handle returns and exchanges properly from the fiscal point of view and to ensure that VAT is reimbursed to you properly you need to follow some rules. 

Making a simple return

Open the order in question and choose "Return " :

In the Returns view choose items and number of items to return, press "Create return":

As soon as you have pressed "Create return" button you will see a new view with  items marked  for return:

Press "Process and refund". New view will be shown. You can choose whether you want to refund the customer (automatically or manually) . Shopify would calculate the refund sum automatically  (22 EUR in the example) , if you choose to refund shipping it will be added to the automatically calculated sum (32 EUR see further example) :  

If you want to complete the refund and do not expect to send any items in exchange , just complete the refund and  press the button "PRocess and refund" . The returned order will be automatically collected by EAS for fiscal purposes. In that case you do not need to do anything else to ensure that VAT is reimbursed to you. 

NB!! If you make a manual refund in a sum that differs from automatically calculated you will need to make a manual correction in the EAS dashboard.  See further instruction for manual corrections: 

Making and order exchange .

If you want to exchange items to the customer without refunding the customer input 0.00 in the field with automatically calculated refund sum. Disregard notification and press the button "Process and refund EUR 0.00": 

Returned items will be identified as such in the order and the sum paid by the customer will not change  : 

Example of exchange

1. Choose the order and start the refund
   
   
2. Make a refund with restocking
   
   
3. Items are now restocked
   
   

4. Once you're prepared to send the replacement order, create a new manual order for the same customer. Follow these steps in Shopify:

   1. Access the "Drafts" section in Orders and select "Create new order."

   2. Choose the items you want to include in the replacement order.

   3. Enter the same customer's details as the original order.

   4. Verify that taxes are enabled for the order.

   5. Mark the order as "Paid" manually.

   6. Save the new order.

Post-Sale Discount Handling

Post-sale discounts are common occurrences where customers receive a refund for a portion of the merchandise value after the order has been shipped. These discounts can arise from various reasons related to the merchant-customer relationship.

To log a post-sale discount:

1. Navigate to the "Orders" section in the EAS dashboard.
2. Locate the order you want to reimburse and click on the order number. Order details window will open
   
3. In the upper right corner press "Create Discount"
   
4.  In the dialog window for each item provide the desired discount amount, either as a percentage or a fixed amount.

5.   Press "Create order discount"
6.   In the confirmation window Confirm the discount, and EAS will create the necessary fiscal entries.

You can only create a post-sale discount for the item in the order once. If further reimbursements are required, you'll need to create a fiscal correction.

 

Remember to retain documentation, such as a copy of the order from your Shopify shop, to support the refund of the discount VAT.

Handling Double Payment of IOSS VAT

This situation can arise when postal operators, courier companies, or shipping aggregators mishandle data transfer or fail to provide the IOSS number or misrepresent the merchandise value in the shipped order. As a result, the customer is charged VAT twice, once at checkout and again at customs.

To correct the double payment of VAT follow these steps:

1. Create a refund of VAT without return in your Shopify store.
   
2. Access the EAS dashboard and navigate to "VAT corrections."
3. Select "Submit new" and follow the instructions for creating a correction entry.
4. Provide the necessary information, including the report type (IOSS), country of order consumption (EU), order year and month, VAT correction amount, correction currency, correction type (deduct), and supporting documentation (customer notification and payment receipt).
5. EAS will review the correction and either approve or reject it. If the correction is rejected, you'll receive an explanation and will need to repeat the process.