The shop is running and orders are coming in, but your bank account shows lump sums that don’t match any invoice. For freelancers and small businesses in online retail, this is one of the most common reasons the bookkeeping stops adding up.
Shopify pays out in batches and keeps its fees first. So book every order at the full amount and the fees separately. Booking only the payout isn’t enough. Shopify bills from Ireland, and reverse charge applies to subscription and app fees if your VAT ID is stored with Shopify. If you sell to private customers in other EU countries for more than €10,000 net a year, the VAT of the destination country applies.
The problem with batch payouts
Shopify Payments, PayPal and other payment providers don’t transfer each order separately. They bundle several orders, deduct fees, refunds and chargebacks and transfer the rest. If you only book that amount, you show too little revenue, report the wrong VAT and never get the numbers to reconcile.
How to book it correctly
- One clearing account per payment provider. For example one for Shopify Payments and one for PayPal.
- Orders at the full amount. Every order goes to the clearing account with the amount the customer paid.
- Fees separately. The fees that were kept are booked as a separate expense.
- Payout against the clearing account. If everything is right, the clearing account is at zero afterwards. If it isn’t, something is missing.
Fees and reverse charge
For Shopify Payments in Germany, your contract partner is Shopify International Limited, based in Ireland. If your VAT ID is stored with Shopify, the invoices for your subscription and apps don’t include VAT. Then reverse charge applies. You report the VAT yourself and can usually deduct it again as input VAT. As a Kleinunternehmer (exempt from charging VAT) you also owe the VAT, but you can’t deduct it. Fees for payment processing may need to be treated differently. Sort out how they’re classified once, and then always book them the same way.
VAT on sales to other EU countries
If you sell to private customers in other EU countries, there’s one combined threshold of €10,000 net for all of these countries together, based on the previous or the current year. Above it, you charge the VAT of the country you deliver to. You can report it all together through the One Stop Shop (OSS) at the Federal Central Tax Office (Bundeszentralamt für Steuern). OSS is optional. Without it you have to register in each country separately.
Automated instead of by hand
With a lot of orders, doing this by hand isn’t realistic. Orders, payments and fees can be transferred to your bookkeeping and matched automatically through integrations, for example BuchhaltungsButler‘s Shopify integration or tools like Billbee or PayJoe. You then only check the differences.
How I can help
I set up the connection between your shop, payment providers and bookkeeping and, if you like, can take over the ongoing bookkeeping.
I record your day-to-day business transactions and prepare your VAT returns and year-end closing up to the final step. You or a tax advisor of your choice then submit them.
Common questions
Do I have to book every order separately?
Not by hand. Orders come into your bookkeeping through an integration, and you only check the differences.
Why does the payout never match my orders?
Because the payment provider bundles several orders and deducts fees, refunds and chargebacks first. A clearing account for each provider makes this visible.
Does reverse charge apply to Kleinunternehmer too?
Yes. If Shopify bills without VAT under reverse charge, you owe the VAT, but as a Kleinunternehmer you can’t deduct it as input VAT.
When do I need the OSS scheme?
As soon as your sales to private customers in other EU countries add up to more than €10,000 net in the previous or the current year. OSS is optional. Without it you have to register in each country separately.
