How return fees are invoiced

When you process a return in Shopify and keep a return shipping or restocking fee, Invoice Inn issues two documents: a credit note for the returned goods and a supplementary invoice for the fee. The original invoice is never changed, and the two new documents together add up to the amount you kept.

What a return with a fee produces

Shopify records the fee as a charge on the order at the moment you click Process and refund on the return. Creating the return alone changes nothing; Invoice Inn acts when the refund is recorded. It then compares what the documents already cover with the order’s current state and issues what is missing:

The document	What it covers
Credit note	The returned goods at the price and VAT the invoice charged, in full
Supplementary invoice	The fee, on a single line named Return fee

With Automatically handle order changes on under Automations > Invoice generation, both are created together, the credit note first. With it off, the order shows under Needs action on the Orders page. Its documents menu reads “Order has both additions and subtractions” and the button Create documents creates both at once.

An order that is returned with a fee before it has an invoice works the same way: the invoice bills the goods and shipping charged at checkout, without the fee, and the credit note and the fee invoice follow.

How this shows on your documents

The supplementary invoice is an ordinary invoice: it takes the next number in your invoice series and lists one line, Return fee, for the amount Shopify kept. The line carries VAT at the rate of the goods that were returned, and the amount is treated as VAT-inclusive, so an EU order taxed at 21% shows the fee split into net and VAT at that rate. If the returned goods carried no tax, for example a tax-exempt customer or a reverse charge B2B order, the fee carries none either.

The credit note lists the returned goods with negative totals and refers to the original invoice by number, exactly as for a refund without a fee. The fee never appears on it. See How refunds become credit notes for what it looks like.

The Return fee label is translated into the document language. To change the wording, open Customize > Localization, scroll to the Translations card and edit Return fee under Other.

Good to know

Return shipping fees and restocking fees are handled the same way. A return that charges both shows one Return fee line for their sum.
Shopify records the fee without tax, so the VAT on the Return fee line is worked out by Invoice Inn from the returned goods. Your Shopify tax reports do not include it, which is expected; the invoice is the document that declares it.
The fee invoice counts toward your monthly document limit, like the credit note.
The customer receives the fee invoice when Email delivery is on and Supplementary invoices is ticked under What to send. The order summary in that email lists the Return fee line.
On Orders, the total shown for an order that has no invoice yet includes the fee. The invoice itself bills the checkout amount only; the fee gets its own document as described above.
With Create invoices set to When the order is fulfilled, an order that is fully returned with a fee before it was invoiced gets no invoice, because nothing is left to bill for the goods. The fee is not documented in that case either.