Bookkeeping for E-commerce Entrepreneurs

Yes, dropshipping bookkeeping is often more complex than for a regular webshop. Sophy &Co. helps you with:

• Margin calculation: Since your purchase price often fluctuates with exchange rates (USD/EUR), we monitor your actual profitability.
• IOSS registration: We handle the application and the monthly remittance of import VAT.
• Invoice automation: We make sure your Shopify orders are correctly matched to your purchase invoices from platforms like DSers, CJ Dropshipping, or Zendrop.

Advice from Sophy &Co.: Many dropshippers forget they must pay VAT on their full revenue, not just the margin. Make sure your prices in Shopify (or any other platform) include the correct VAT rates to protect your margins.

With dropshipping, you supply goods you don't hold in stock yourself. The tax treatment depends entirely on the route the parcel takes:

• Model 1: Import from outside the EU (e.g. AliExpress/China to the Netherlands)
  Since 1 July 2021, the VAT exemption for parcels under €22 no longer applies. You now have two main options: IOSS (Import One-Stop Shop): You charge Dutch VAT directly at your Shopify checkout and remit it monthly through an IOSS return. The parcel then goes straight to the customer through customs with no extra costs. Special Arrangement (postal scheme): The customer pays the VAT and clearance costs at the door. Note: this often leads to negative reviews.
• Model 2: Within the EU (e.g. supplier in Germany to a customer in the Netherlands)
  This is treated as a 'chain transaction'. You buy from the supplier (often at 0% VAT due to an intra-community acquisition) and sell to the consumer at the VAT rate of the consumer's country.

The postal scheme, also known as the Special Arrangement, is a method for handling import VAT on shipments with a value up to €150.

• How it works: Instead of you, as the webshop, charging VAT upfront (via the IOSS scheme), the VAT is only collected when the parcel is imported into the EU. The postal or courier company (such as PostNL or DHL) files the import declaration and advances the VAT.
• The consequence for the customer: The carrier collects the VAT and often additional handling costs directly from the customer at the door (or via a payment link) before handing over the parcel.
• When this is used: This is often used by dropshippers who don't have an IOSS number, or whose supplier outside the EU isn't connected to modern VAT systems.

Warning from Sophy &Co.: While the postal scheme may seem administratively easy for you as an entrepreneur, it often leads to a poor customer experience. Customers expect to pay VAT-inclusive prices at a Dutch webshop and are put off by extra costs at the door. We therefore almost always recommend using the IOSS scheme instead, so the customer pays upfront with no surprises.

VAT for e-commerce depends on where your customer is located and whether it's a private individual or a business customer.

• Within the Netherlands: You simply charge 21% (or 9%) VAT.
• Within the EU (private individuals): Since 2021, a threshold of €10,000 applies. Once you exceed it, you must charge VAT at the rate of the customer's country.
• Outside the EU: This is generally treated as an export; you charge 0% VAT, but watch out for customs forms and import duties in the destination country.

Tip from Sophy &Co.: Make sure your Shopify tax settings are correctly configured based on your shipping zones to avoid mistakes.

The One-Stop-Shop (OSS) scheme is designed to simplify VAT remittance within the EU. Instead of having to register for a VAT number in every individual EU country (such as Germany or France), you can declare all your foreign EU VAT in one go through the Dutch Tax Administration (Belastingdienst).

• Who it's for: Webshops that sell more than €10,000 per year to private individuals in other EU countries.
• Benefit: Less administrative burden and no need for a local bookkeeper in every country you sell to.

Bookkeeping for a Shopify shop can be complex due to the high number of small transactions and various payment providers (Shopify Payments, PayPal, Klarna).

• Automation: At Sophy &Co., we recommend connecting Shopify to your bookkeeping software. This automatically converts orders into invoices.
• Matching: The most important (and trickiest) part is matching Shopify's payouts to the outstanding invoices, including accounting for transaction fees. We take this entire process off your hands so your books always add up.