Registration-based taxes in the EU
If you're already using Shopify to sell in the European Union, then you can update your EU tax settings to reflect your tax registrations. Your tax registrations determine where you collect taxes. When you update your tax settings, you're asked to provide a VAT number. After you add a VAT registration, Shopify automatically sets the tax rates that apply in the areas you've registered for.
Shopify Support can help you update your tax settings in your Shopify admin, but can't provide legal tax advice. If you need help changing your tax settings, then contact Shopify Support. If you need help understanding your tax obligations, then contact local tax authorities or a tax professional.
On this page
- What's a VAT number? Do I need one?
- How do I know if I need to register to charge taxes?
- Do I have to register for a VAT number in other countries?
- Which VAT rate do I need to charge?
- How do I register to charge taxes in an EU country?
- Will I be able to override tax settings?
- Where can I go for more help?
- What do I need to know about Brexit?
- After I update my tax settings, why are the tax amounts different than before on customer orders?
- Related links
What's a VAT number? Do I need one?
A VAT number, also referred to as a value-added tax identification number (VATIN), is an identifier used in the EU. It's provided to you by a member country's tax authority after you register with them. This number is issued by countries to allow merchants to charge value-added tax.
How do I know if I need to register to charge taxes?
Typically, if you intend to sell to other countries in the EU, then you need to register with the tax authorities in your own country to charge VAT. If you sell cross-border, such as from Germany to France, then a One-Stop Shop scheme registration might help streamline your registration process.
Do I have to register for a VAT number in other countries?
It depends. You might need to register in another region as well as your home country if you sell to customers in other EU member countries, or if you have a significant business presence there, such as a sales location or a fulfillment center.
You can register for the One-Stop Shop scheme to simplify registrations for cross-border sales. The One-Stop Shop (OSS) scheme allows merchants to collect and remit VAT for cross-border sales in all EU member countries, rather than registering for each member country individually. You can only use OSS if your store uses registration-based taxes. If you haven't updated your settings to use registration-based taxes, then update your tax rates manually by using location-based tax rates. Local sales require a local tax registration for that country, and aren't covered by the OSS.
If you have a significant presence in a country, then you should contact that country's tax authority to confirm whether you need to register to collect taxes. It's your responsibility to determine if your business exceeds the distance sales threshold.
Which VAT rate do I need to charge?
As of July 1, 2021, distance selling thresholds for individual countries no longer apply. Instead, a single distance selling threshold of €10,000 EUR applies for the entire EU. This threshold determines the VAT rate you should charge, but you should collect VAT the first time you sell into another EU member state.
- For customers in your home country, your local VAT rate is charged.
- For customers in EU countries outside your own, the rate is determined by whether you exceed the cross-border sale threshold.
- If your combined sales to all other EU member countries are less than €10,000 EUR in total, then you can choose to charge your home country’s VAT rate in other EU countries and remit VAT to your home country’s government. If you choose to charge your home country's VAT rate for all EU sales, then you might need to apply for the micro-business exemption with your local tax authority. If you're not sure whether you need to apply, then consult with your local tax authority or a tax professional.
- If your combined sales to other EU member countries are equal to or greater than €10,000 EUR in total, then you charge the VAT rate in your customer's location for all sales to other countries.
How do I register to charge taxes in an EU country?
If your sales to other EU countries is equal to or greater than €10,000 EUR, then you can register for the OSS scheme. The OSS scheme allows merchants to collect and remit VAT for sales in all EU member countries, rather than registering for each member country individually. You can only use OSS if your store uses registration-based taxes. If you haven't updated your settings to use registration-based taxes, then update your tax rates manually by using location-based tax rates.
If you need to register to charge taxes in a specific EU country, then you can contact that country's tax authorities.
After you've registered, add your VAT number on the Taxes and duties page.
Steps:
From your Shopify admin, go to Settings > Taxes and duties.
In the Regional settings section, click European Union.
In the VAT on sales section, click Collect VAT.
Select a country in which you're registered.
In the VAT number field, enter your VAT number.
Click Add country.
Optional: To add more regions and account numbers, click VAT registration.
You can delete or change your registrations or account numbers with the ...
button next to the country name in the VAT registrations section.
Will I be able to override tax settings?
Yes. For more information about how EU tax overrides are affected when you update, refer to Override taxes.
Where can I go for more help?
Shopify Support can help you with how to change your settings, but can't advise you about whether you should change your settings. If you need help determining whether you should register with VAT member countries and charge taxes to your customers, then your best resource is a local expert, such as an accountant or financial advisor. You can also contact individual country tax authorities directly.
What do I need to know about Brexit?
If you sell to customers in the UK, then the best way to get information about how Brexit affects your business is by contacting a local tax professional. As a starting point, the following are some of the new laws that apply to merchants who sell to customers in the UK:
- The sale of goods from outside the UK to customers within the UK have become imports (the receipt of goods into a country or customs union from outside country or customs union) rather than acquisitions (the receipt of goods from one EU member country to another EU member country).
- You might need a UK EORI number.
- The UK VAT laws that came into force on January 1, 2021 result in new VAT requirements for sales equal to or less than £135 GBP.
- If the sale of goods is equal to or less than £135 GBP, then you must register for VAT in the UK. In this case, VAT is collected at the point of sale and remitted by the merchant. If you use registration-based taxes and have a UK VAT registration, then VAT is applied to your sales to customers in the United Kingdom.
- If the sale of goods is over £135 GBP, then you might not be required to collect VAT at the point of sale. In this case, VAT and duties are remitted by the importer. If you use registration-based taxes and have a UK VAT registration, then VAT isn't applied to your sales to customers in the United Kingdom. If you choose to, you can charge your customer for VAT and duties at the time of sale, and then provide these funds to the shipper or importer using a shipping label. Alternatively, you can send the orders without charging VAT and duties, and your customer will pay extra funds at the time of delivery. Learn more about handling VAT and duties.
Learn more about the implications of Brexit for your business.
After I update my tax settings, why are the tax amounts different than before on customer orders?
In some orders, you might notice a small variance in your total tax amounts after you've updated your tax settings. This variance is due to tax amounts being rounded at the line-item level, rather than at the invoice level. You can learn more about rounding calculations in Setting up EU taxes.