Choose a tax service

When setting up your taxes for the United States, European Union, and United Kingdom, you can choose the tax service that works best for your needs. You can select Shopify Tax, Basic Tax, choose to use manual tax settings, or use a third-party tax service provider if you need specialized solutions. You can change which tax service you use at any time.

Each calendar year, Shopify Tax is free until you reach 100,000 in global GMV per store. After that, standard rates will apply to eligible orders in the regions where you collect tax.

If Shopify Tax isn't a good fit for you, then you can use either of the following tax options:

  • Basic Tax is a free service that requires more manual effort.
  • Manual Tax is a free service that requires the most manual effort.

Review the following table to determine which tax service is best for your needs.

Table outlining the features of tax services
Shopify TaxBasic TaxManual tax settings
Sales tax calculation
Automatic rate calculations using tax registrations
Automatic rate calculations using product categories
Automatic recommendations for product category
Managed Markets
Rooftop accuracy (United States only)
Support for state fees (United States only)
Tax holidays (United States only)
Automatic proportional shipping tax using product categories (European Union and United Kingdom only)
Reporting and insights
Tax reports
Advanced tax reports (currently United States only)
Tax liability insights
Exemptions and overrides
B2B tax exemptions
Customer tax exemptions
Manual tax rate overrides
Collect tax in states with no state sales tax (United States only)
VAT invoices
Generate and display VAT invoices (European Union and United Kingdom only)
Add custom logo to VAT invoices (European Union and United Kingdom only)
Automated tax filing
Automatically generate and file tax returns (United States only)

Choose your tax service

After you review the features and considerations for each tax service, you can choose the service that you want to use.

Steps:

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

  2. Optional: If you want to use a third-party tax service provider, then find the tax app that you want to use in the Tax apps section, and then click Install.

  3. Click United States, European Union, or United Kingdom, depending on which region you want to select a tax service for.

  4. In the Tax service section, click , and then click the option in the dialog box. Depending on your current tax service, this is labeled Upgrade service, Switch service, or Downgrade service.

  5. Select the tax service that you want to use.

  6. Click Save.

Registration-based tax collection

Taxes are automatically collected for eligible states and countries states where you have a registered tax liability.

Rate calculation using product categories

Tax exemptions and modifications are calculated automatically based on the category of the product.

Automatic recommendations for product categories

Product categories are automatically suggested for your products.

Managed Markets

Managed Markets is supported only on Shopify Tax. You can't use manual tax settings with Managed Markets.

Rooftop accuracy (United States only)

Rooftop accuracy means that taxes are calculated precisely according to street address, rather than being limited to ZIP codes. This feature is included only in Shopify Tax.

Support for state fees (United States only)

Some states collect tax-like fees. For example, in Colorado, orders containing taxable goods that are delivered by a motor vehicle in Colorado are subject to a non-refundable retail delivery fee. This feature is included only in Shopify Tax.

Tax holidays (United States only)

Special tax rates that apply on specific dates are automatically calculated. For example, Texas has a sales tax holiday from August 5-7 each year. This feature is included only in Shopify Tax.

Proportional shipping tax

Proportional shipping tax refers to the tax charged on shipping being calculated in proportion to the tax charged on products. Proportionally taxed shipping considers the tax rate on line items and the line item value to charge the weighted average percentage to shipping, which is a requirement in the European Union and the United Kingdom.

Tax reports

Allows you to access reports that display the amount of taxes you've collected.

Liability insights

Automatic suggestions and insights on your potential tax liabilities in the United States, European Union, and United Kingdom are provided based on where you ship and sell to.

Advanced reports (currently United States only)

Advanced tax reports have additional details about the amount of tax you collect, and can be used to help you file with tax authorities.

B2B tax exemptions

Allows you to sell licensed products that are tax-exempt.

Customer tax exemptions

Allows you to designate that specific customers are tax-exempt.

Product and shipping tax overrides

Assign product tax overrides or shipping tax overrides to apply specific tax rates that override any other tax calculations for selected products or shipping destinations. Overrides can only be applied at the state level or country level if you use manual tax settings.

Collecting tax in states with no state sales tax (United States only)

Allows you to collect tax in states that have no overall tax rate. For example, if you're in New Hampshire and you sell food that's prepared and consumed on-site, then you might need to apply a 9% tax rate.

Generate and display VAT invoices (European Union and United Kingdom only)

Allows you to generate and display VAT invoices. In the European Union and the United Kingdom, VAT invoices are required for VAT-exempt distance sales. VAT invoices are displayed on the order confirmation page for customers, and on the order page for you to access and download. In order to use invoicing capabilities, you must activate VAT invoices.

Allows you to generate and display VAT invoices with a custom logo that you upload.

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