Setting up EU taxes

If you're new to Shopify, then before you start selling, you need to determine whether you should charge tax. You might need to register with various VAT member countries. After that, you can set up your taxes in Shopify to help ensure that you charge the correct rates wherever you sell in the European Union.

Before you begin setting up EU taxes in Shopify

You need to determine whether you should charge taxes. If you're not sure, then consult with local tax authorities or a tax professional. 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 exceed a certain threshold of sales into another country in the EU, or you have a significant business presence there, then you might need to contact each of the relevant agencies and register with them. The process varies depending on where your business is based and where you sell, and on individual government requirements. Where you're registered to collect VAT determines the rates that you charge to your customers.

  • 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.

If you have a significant presence in a country, then you should contact its 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.

Set up the regions in which you're registered

After you've registered with the VAT member countries and have your EU VAT number, you can set up your taxes. You only need to perform this task once.

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 registrations section, click Add VAT registration.
  4. Select a country in which you are registered.
  5. In VAT number, enter your VAT number.
  6. Click Add VAT registration.
  7. (Optional) Add more regions and account numbers, click Add VAT registration.

After you set up your tax regions, then you can create tax overrides for products where the default tax rates don't apply.

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