Your Shopify and WooCommerce legal and tax checklist by country. Learn VAT/IOSS, consumer rights, and payment rules. Start compliant and scale faster.
Launching a dropshipping store is faster than ever, but staying compliant across taxes, consumer rights, payments, and privacy can feel confusing. This guide gives you a practical, country-by-country checklist for Shopify and WooCommerce beginners, so you can focus on marketing and fulfillment while avoiding costly mistakes. If you want the fastest path to launch, the WooDropship plugin lets you import AliExpress products in one click, optimize listings with AI, and fulfill orders via our Chrome extension, while our prebuilt Shopify stores come with essential legal pages, payment setup, and SEO done for you.
Whether you use WooCommerce or Shopify, you are the merchant of record on your own website, which means you are responsible for taxes, returns, and payment compliance. Shopify is generally not a marketplace facilitator for your standalone store, so you must configure and remit your own taxes, although the Shop sales channel is treated as a marketplace for certain US states and handles tax on those Shop transactions as explained in Shopify’s Shop sales tax guidance. WooCommerce is open-source software, so compliance depends on your selected payment gateway and tax plugins. For operations, set a clear customer support standard. If you need a benchmark, see our wiki on customer complaint resolution time.
If you want to speed this up, our Shopify stores deliver in 7 days with PayPal and Stripe ready, conversion features installed, and legal pages included. If you prefer WooCommerce, our plugin is a lifetime license for a one-time $89. Either way, you get a low-risk, low-cost setup designed for beginners who want to start today.
Business setup: most small dropshippers start as a sole proprietorship or LLC and obtain an EIN if needed for banking. Sales tax is the tricky part. Since the Supreme Court’s South Dakota v. Wayfair decision, states can require remote sellers to collect sales tax even without physical presence. The state-by-state thresholds are summarized in the Sales Tax Institute’s economic nexus guide, which explains that each state sets its own revenue or transaction threshold. Many states used to apply a 200-transaction test, and several have been eliminating it in favor of a revenue-only threshold, as discussed by Avalara’s 2025 update on transaction thresholds. For marketplace sales on Amazon or eBay, marketplace facilitator laws usually shift collection to the platform, which is summarized in Avalara’s state-by-state marketplace facilitator laws guide. That does not generally apply to your own Shopify or WooCommerce site.
Consumer rights: the US does not have a federal 14-day right to return like the EU, but the Federal Trade Commission enforces specific shipping and refund obligations. According to the FTC’s Mail, Internet, or Telephone Order Merchandise Rule, you must have a reasonable basis to ship within the stated time or within 30 days if you do not specify. If you cannot ship on time, you must obtain the buyer’s consent to delay or issue a prompt refund. If you import goods directly to US consumers, many small parcels enter under the de minimis rule of 800 dollars. The CBP Section 321 program overview explains that qualifying shipments may be admitted free of duty and tax, but you are still responsible for state sales tax where you have nexus.
Privacy: many states now have data privacy laws, with California’s leading framework. The Office of the Attorney General explains in its CCPA overview that businesses must provide a notice at collection and allow data access and deletion requests for eligible consumers. Your privacy policy and consent flows must reflect these rights.
Payments: payment gateways care about risk, shipping times, and disputes. For PayPal, review the Acceptable Use Policy and be aware that PayPal can apply reserves to new or higher-risk sellers, as described in PayPal’s reserves article. For risk reduction, upload tracking automatically and fulfill quickly to reduce holds, and monitor disputes using our wiki on chargebacks. Stripe maintains a global restricted businesses list that excludes items like counterfeit goods or illegal products. If you sell only compliant physical goods with reliable shipping and clear policies, approvals are typically straightforward. Our guide to getting approved, the PayPal and Stripe approval playbook, can help you set expectations and avoid account flags.
VAT for cross-border ecommerce changed in 2021. The European Commission’s page on the VAT One Stop Shop and Import One Stop Shop explains that IOSS lets sellers collect VAT at checkout on B2C imports where the consignment value does not exceed 150 euros. Above 150 euros, VAT and duties are typically collected on import. Shopify supports IOSS setup in its EU tax reference, which explains how to configure VAT and apply IOSS for orders up to 150 euros. For WooCommerce, you can use dedicated extensions such as the official IOSS EU VAT for WooCommerce to handle IOSS numbers, evidence, and special tax treatment.
Consumer rights are strict. The EU Consumer Rights Directive provides a 14-day right of withdrawal on distance contracts. The EU’s summary on EUR-Lex confirms in the consumer information and right of withdrawal overview that consumers can cancel within 14 days from delivery. You must disclose return instructions and bear the cost rules transparently in your policy.
GDPR applies to any business processing EU personal data. The European Commission’s primer on data protection explains that SMEs still have to comply, though some obligations may be lighter. A practical summary of principles like lawfulness and data minimization is covered in GDPR.eu’s explanation of GDPR. Maintain a lawful basis for marketing emails and apply cookie consent where required.
Payments require Strong Customer Authentication. As Stripe’s SCA guide explains, PSD2 requires two-factor authentication on most card payments in the EEA, typically via 3D Secure 2. Shopify Payments and modern Stripe integrations handle SCA automatically. If you self-host with WooCommerce, ensure your payment plugin is SCA-ready.
Post-Brexit, the UK treats imports differently. For consignments valued at 135 pounds or less, VAT is collected at the point of sale. HMRC’s guidance for overseas sellers confirms in the page on goods sold directly to customers that the 135 pound threshold applies per consignment, and sellers must charge VAT at checkout if they are responsible for the sale. If an online marketplace facilitates the sale, HMRC’s guidance for goods sold via online marketplaces explains the marketplace is usually responsible for VAT collection on consignments up to 135 pounds. For your own Shopify or WooCommerce site, you are typically responsible to register and collect where required.
The UK maintains a 14-day cancellation right on distance sales through the Consumer Contracts Regulations. The legislation page on The Consumer Contracts Regulations 2013 sets out the consumer’s right to cancel during the cooling-off period. UK GDPR mirrors EU GDPR principles post-Brexit. SCA also applies in the UK under the Payments Services Regulations, and Shopify Payments or Stripe will invoke 3D Secure automatically.
Australia requires sellers or electronic distribution platforms to collect GST on low value imported goods supplied to Australian consumers. The Australian Border Force page on GST on low value goods explains that GST can apply to consignments of 1000 AUD or less, with sellers or platforms collecting at checkout. For goods valued above 1000 AUD, GST is collected at the border as noted by the Australian Taxation Office’s guidance on imported goods.
Consumer rights are robust under the Australian Consumer Law. The ACCC’s page on repair, replace, refund, cancel explains that consumers are entitled to remedies when products do not meet guarantees of acceptable quality or fitness for purpose. Make sure your return policy is consistent with these guarantees and avoid blanket no-refund language.
Canada updated GST/HST rules for the digital economy in 2021. The Canada Revenue Agency’s overview of GST/HST for digital-economy businesses explains that nonresident suppliers and distribution platform operators may be required to register and collect GST/HST on sales to Canadian consumers, depending on the activities and location of fulfillment. If you sell goods through a fulfillment warehouse in Canada, check the CRA’s non-resident guide to determine if registration is required.
Low value de minimis rules affect import duties and taxes on courier shipments. The CBSA’s courier low value shipment program describes simplified importation for low value shipments. Be aware that the thresholds for duties and taxes differ and can vary by transport method, so communicate import charges clearly to customers.
Privacy obligations are enforced under PIPEDA. The Office of the Privacy Commissioner’s summary of PIPEDA requirements and its guidelines for obtaining meaningful consent outline what you must disclose, how to obtain consent, and how to handle customer requests. Update your privacy policy and consent banner to reflect these obligations.
Shopify users can enable EU VAT and IOSS collection for consignments up to 150 euros in the EU tax reference, and can configure tax settings for the US, UK, Canada, and Australia by region. Shopify Payments supports SCA and 3D Secure out of the box. If you want a turnkey setup, explore our prebuilt Shopify stores that include payment gateway configuration, legal pages, and conversion apps. If you are starting fresh with Shopify, sign up through our Shopify partner link.
WooCommerce users can install extensions for VAT, IOSS, and UK VAT. The official IOSS EU VAT for WooCommerce handles imports up to 150 euros with IOSS numbers. To reduce chargebacks and fraud, pair your checkout with modern 3D Secure-capable gateways and follow best practices in our wiki on payment gateways and fraud prevention. For catalog and fulfillment speed, use the WooDropship plugin to import AliExpress products, bulk edit pricing, and sync tracking to customers and PayPal.
United States
European Union
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If you want a shortcut, our done-for-you Shopify stores include legal pages, payment gateway setup, SEO, and 30 vetted products in your niche. Prefer WooCommerce control with no recurring app fees? The WooDropship plugin gives you lifetime access for a one-time $89, plus a free trial. And if you have questions about policies or need a compliance sanity check, our team is happy to help via contact us. Review our legal center, including the privacy policy and terms of service, to model your own store policies.
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