If you require any of these features, then review the table of tax services to determine which tax service is best for your needs.
Before setting up tax settings and rates manually
If you're new to Shopify, then you need to determine whether you should charge sales tax before you start selling. You might need to register with multiple tax agencies. After that, you can set up your taxes in Shopify to help ensure that you charge the correct rates wherever you sell in the United States, European Union, and United Kingdom.
Before you add tax rates in the Settings > Taxes and duties page of your Shopify admin, review the following considerations:
You need to determine whether you should charge sales tax. If you're not sure, then consult with the relevant tax authorities or a tax professional.
If you need to charge sales tax in one or more jurisdictions, then you 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.
After default tax rates are set up manually, they're not automatically updated based on new regulations unless you click the Reset to default tax rates button again.
Set up manual tax rates
After you determine where you need to charge sales tax, you can manually set your tax rates.
In the Tax regions section, click the region that you want to set up taxes for.
In the Base taxes section, specify the taxes manually for each state and region, or select Reset to default tax rates to use the current sales tax rate for each state or country.
Optional: For US tax settings, you can choose whether a tax in a region is used instead of a federal tax, added to a federal tax, or compounded with a federal tax.
Click Save.
Remove a physical presence
Although you can remove your business's physical presences, you need to keep at least one physical presence for the country that's specified in your store address on the Settings > General page.
For tax purposes, it's assumed that you have a physical presence at your store address. If you remove that physical presence from the Taxes and duties page, then that location is automatically added back.
You can remove a physical presence from the County, municipal, and state taxes section.
In the Tax regions section, click the relevant region.
Find the physical presence that you want to remove, and then click icon.
Make sure that taxes aren't duplicated
If you set up taxes for a country and its sub-regions, then you need to make sure that you specify whether a regional tax is added or compounded to any federal tax, or is to be used instead of the federal tax. If your customers in a country are getting charged taxes twice, then you might have the sub-region taxes configured to be added to the total tax for that country.
For example, you have an item that costs $100.00. A customer buys that item in an area where there are country and regional tax rates, both at 10%.
If you select added to, then the country and region are both charged and added together. In this case, the country tax amount is $10.00, and the regional tax is $10.00. These are added together for a total price of $120.00.
If you select instead of, then the regional amount is charged and the country amount isn't. In this case, there is no country tax, and a regional tax of $10.00. The total price of the item is $110.
If you select compounded on top of, then the tax amount for the country is determined and then the regional amount is charged on that subtotal. In this case, the country tax amount is $10.00. Regional tax is then applied to the subtotal of $110.00, producing a regional tax amount of $11.00. When totaled, this results in a total price of $121.00.
You can verify or change your tax settings for a region.
In the Tax regions section, click Edit beside the country's name. The taxes display for the country and for the sub-regions by state or province.
Choose an option from the drop-down menu under the sub-region tax rate to specify how you want to charge taxes.
Click Save.
Change the default name of the value added tax (VAT)
For countries that have a value added tax, the default name that is given to the tax is VAT. The short form VAT displays on your checkout page, customer receipts, and in the Order details section of orders.
If you're in a country that uses a different short form for the tax, then you can change the name on the Taxes page. For example, several countries use IVA instead of VAT. You can change the name only if subregions are included for the country in the Shopify admin, such as for Italy and Spain. You can't change the name if subregions aren't included, such as for Austria and Norway.
For each region, change VAT to the short form that you want to use.
The name is specific for each region, so you need to change it for each one.
Click Save.
Shipping tax with Manual Tax
When you use Manual Tax, taxes on shipping are not automatically calculated. Automatic shipping tax calculation is only available with Basic Tax or Shopify Tax. If you need to charge tax on shipping, then you must manually set up shipping tax rates for each region where it's required. For more information, refer to Shipping tax.
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