Setting up EU taxes

Note

This guide is for stores that sell in the European Union. It's your responsibility to consult with local tax authorities or a tax professional to verify that you charge your customers the correct tax rates, and to ensure that you file and remit your taxes correctly.

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.

Note

If you're already selling on Shopify, then refer to Update to the new EU taxes feature instead.

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 register for the One-Stop Shop (OSS) scheme, or 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 of €10,000 EUR.
  • If you do not exceed the threshold, then your local VAT rate is charged.
  • If you 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 One-Stop Shop (OSS) or with that 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.

Charge VAT with the OSS

The One-Stop Shop scheme, also called the Union OSS, is for merchants with locations in the EU whose sales to other EU member countries require them to charge and remit VAT based on destination countries. Because of Northern Ireland's dual status, merchants with locations in Northern Ireland can also use the OSS.

If your annual sales to all other EU member countries are less than €10,000 EUR, then you can either use the micro-business exemption to charge your local VAT rate, or register for the OSS if you want to charge VAT based on the location of your customers.

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.

Setting up your VAT registrations

After you register with the VAT member countries and have your EU VAT number, you can set up your taxes. Keep your VAT registrations up to date to ensure that Shopify can collect the correct VAT, generate compliant VAT invoices, and inform you of your tax liabilities more accurately. Before you start, determine how to enter your VAT registration:

• If you're registered with specific countries to charge VAT, then set up local VAT registration.
• If you make sales outside your country, you've registered for the OSS scheme, and you plan to submit a single VAT return for all sales to customers in EU member countries, then set up OSS VAT registration.
• If you make sales outside your country that total €10,000 EUR or less and you plan to submit a VAT return to your local tax authority, then set up micro-business VAT registration.

Set up local VAT registration

1. From your Shopify admin, go to Settings > Taxes and duties.

2. In the Regional settings section, click European Union.

3. In the Collect VAT in an EU country section, click Collect VAT.

4. Select the country where you have a VAT registration, and then enter your VAT number.

5. Click Collect VAT.

6. Optional: If you're registered to collect VAT in additional countries, then click Collect in another location to add additional VAT numbers.

Set up OSS VAT registration

1. From your Shopify admin, go to Settings > Taxes and duties.

2. In the Regional settings section, click European Union.

3. In the Collect VAT cross-border section, click Collect VAT.

4. Select Collect using a One Stop Shop (OSS) registration.

5. Select the country where you have an OSS registration, and then enter your VAT number.

6. Click Collect VAT.

Set up micro-business VAT registration

1. From your Shopify admin, go to Settings > Taxes and duties.

2. In the Regional settings section, click European Union.

3. In the Collect VAT cross-border section, click Collect VAT.

4. Select Collect using your home country registration.

5. Select the country where you're registered, and then enter your VAT number.

6. Click Collect VAT.

Caution

If you're located in the EU or you collect VAT on sales within the EU, then collecting VAT when you ship to customers in the EU from outside of the EU isn't supported.