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. This change doesn't affect how tax is charged on your products.

When you update your tax settings, you're asked to provide a VAT number. After it's been added, 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.

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.

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 exceed a certain threshold of sales in another country in the EU, or if you have a significant business presence there. What constitutes this threshold can differ from country to country.

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?

The VAT rate that you charge is determined by your customer's location.

  • 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 registration threshold.
    • If you do not exceed the threshold, then your local VAT rate is charged.
    • If you do exceed the threshold, then the VAT rate of your customer's country is charged. To charge the destination country's VAT rate, you need to register for a VAT number with that country.

How do I register to charge taxes in an EU country?

If you need to register to charge taxes in an EU country, then you can contact that country's tax authorities.

After you've registered, add your VAT number on the Taxes page.

Steps:

  1. From the Shopify admin, go to Settings > Taxes.
  2. In the Tax regions section, beside European Union, click Set up.
  3. In the VAT collection section, click Collect VAT.
  4. Select a country in which you are registered.
  5. In VAT number, enter your VAT number.
  6. Click Collect VAT.
  7. Optional: To add more regions and account numbers, click Collect VAT.

You can delete or change your registrations or account numbers with the ... button next to the country name and account number in the Tax 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 state to another EU member state).
  • 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 will be applied to your sales to customers in the UK.
    • 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 will not be applied to your sales to customers in the UK. 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.

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