Switching to registration-based taxes
If you're already using Shopify, then you can update your 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 tax number. After the tax number is added, tax rates in the regions where you've registered are updated automatically.
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 tax number?
A tax number is an identifying code that allows you to collect tax on your product sales. Your tax number is issued to you by your local tax authority. Depending on which region you are in, the tax number might be called a VAT number, a sales tax ID, or simply a tax number. If you're not sure, refer to a local tax expert.
How do I know if I need to register for a tax number and charge taxes?
It depends. Typically, you're required to register to charge taxes if your sales exceed a certain threshold. Refer to your local tax authority to find out what the requirements are in your region.
Do I have to register for a VAT number?
If you intend to sell to countries in the EU or UK, then you might need to register with tax authorities in those regions. The process varies depending on where your business is based and where you sell, and on individual government requirements. It's your responsibility to determine where you need to register to charge VAT.
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.
How do I register to charge taxes in an EU country?
If you need to register to charge taxes in an EU country or in the UK, then you can contact that country's tax authorities.
After you've registered, add your VAT number on the Taxes page.
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:
- 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.
Will I be able to override tax settings?
Yes. For more information about how 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 a tax authority 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 selling in the EU?
When merchants outside the EU ship orders to customers in EU member countries, then the following import and duty rules apply:
- For orders that are equal to or less than 150 EUR, VAT is applied.
- For orders that are greater than 10 EUR, import VAT and duties are applied.
If you don't charge VAT and duties during the checkout process, then your customer pays them to the shipping carrier upon delivery.
If you want to collect VAT at checkout, then you need to register for a VAT number. To help you manage the complexity of registering for a VAT number, reporting your sales, and remitting VAT, the EU has introduced the Import One-Stop Shop scheme (IOSS). If you're not sure whether you should apply to the IOSS, then contact a local tax professional.
After you receive your IOSS number, you need to add it to your tax registration in your Shopify admin. Before you add your IOSS number to your tax registration, make sure that you've set up a shipping profile for the European Union.
- From the Shopify admin, go to Settings > Taxes.
- In the Tax regions section, beside European Union, click Manage.
- In the Shipping to the EU section, next to VAT on sales to the EU, click Collect VAT.
- From Registration country, select the country where you registered for IOSS.
- In IOSS VAT number, type your IOSS number.
- Click Collect VAT.
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 taxes.