Shopify refunds: how to recover VAT with credit notes

When a customer returns a product bought in your Shopify store, the refund alone is not enough. For tax purposes you need to issue a credit note (a corrective invoice) to recover the VAT you have already declared.

Why does it matter?

If you do not issue the credit note, the VAT on that sale has already been declared and paid to the Tax Agency. You are paying tax on a sale that never completed. In a business with 5-10% returns, this can add up to hundreds or thousands of euros a year.

How is it done correctly?

• Issue a credit note referencing the original invoice.
• Record the amount as a negative in your accounts.
• Include the negative VAT in the quarterly return (Form 303).

At EkonYou we automate this process for Shopify sellers. Ask us.

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