Shopify Tax features for the European Union and United Kingdom

VAT invoices

If your store sells to customers in the European Union or the United Kingdom, then you can generate VAT invoices in the Shopify admin that attach to an order confirmation page to ensure that you remain compliant with international tax requirements. As part of the early access program, improvements have been implemented to VAT calculations to improve accuracy.

To be eligible for VAT invoices, the following must be true of an order:

duties were not calculated and charged for the order
the order is being shipped to a destination in the European Union or the United Kingdom

Before you generate VAT invoices, ensure that your VAT registrations are complete and up to date.

Activate automatic VAT invoices

You can automatically generate and send VAT invoices from your Shopify admin in your Taxes and Duties settings.

Steps:

From your Shopify admin, go to Settings > Taxes and duties.
Select European Union and/or United Kingdom.
In the VAT Invoices section, select Generate and Send invoices when orders are placed.
Optional: Select a custom logo to include on your invoices. The logo will apply to all VAT invoices regardless of region. Refer to Managing Brand Assets for logo requirements.

Resend VAT invoices to customers

From your Shopify admin, go to Orders.
Click the order that you want to resend a VAT invoice for.
In the Timeline or VAT invoice sections, tap the applicable VAT invoice that was previously sent to the customer.
In the PDF preview of the VAT invoice, download the PDF and then email it to the customer.

After you click Generate VAT invoice, a VAT invoice is created in PDF format. To manually send the invoice to your customer, download the invoice, and then email it to your customer.

Customer experience

After you generate a VAT invoice, or it's automatically generated, it displays in the VAT Invoice section of a customer's order confirmation page. If you make changes to an order that require a new VAT invoice, then a new invoice populates in the VAT Invoice section. A customer can save or print a copy of their VAT invoice from a PDF on a desktop device, or by using the Share icon on a mobile device.

Product categories

If your store sells to customers in the European Union or the United Kingdom, then you can use product tax categories to improve the accuracy of your VAT rates.

Product categories are labels that are assigned to products or to collections of products. Product categories are used to indicate the tax obligations and exemptions that apply to a purchase. Product categories are selected from Shopify's Standard Product Taxonomy, which is a predefined and standardized list.

Product categories are also useful for managing your products, and can be used for the following tasks:

filtering your product list
creating automatic collections
selling on channels that require a standardized product type, such as Facebook
adding category metafields that can be connected to your variants

When you create a product and enter a name, description, and add images for the product, this information is used to automatically generate a product category suggestion. This category is only a suggestion, and shouldn't be considered tax advice.

On the Product categories page, a notification is displayed if you have products that don't have product categories applied to them, or if you have suggestions for product categories that need to be reviewed. Products in need of review are displayed in either of the following tabs:

The Pending review tab displays products that have suggested product categories. Product categories that are suggested in this tab don't apply unless you accept them.
The Pending selection tab displays products that don't have suggestions, and must be manually selected.

There are multiple ways that you can apply product categories to your products:

Select or approve a product category individually

From your Shopify admin, go to Settings > Taxes and duties.
In the Regional settings section, click European Union or United Kingdom.
In the Tax rate management section, click Uncategorized products.
On the Product categories page, find the product to select or approve.
Do one of the following:
- If a suggested product category is provided, then approve the suggestion:
  1. Click the check mark in the Product category box.
  2. Click Save.
- If a category is not provided, or needs correction, then search for and select a product category:
  1. Click the x in the Product category box.
  2. In the Product category box, start typing a description of the product.
  3. Click the product category when the correct suggestion is offered.
  4. Click Save.

Select or approve product categories in bulk

From your Shopify admin, go to Settings > Taxes and duties.
In the Regional settings section, click European Union or United Kingdom.
In the Tax rate management section, click Uncategorized products.
On the Product categories page, click the checkbox next to all products that you want to select or approve.
Do one of the following:
- If suggestions are provided, then approve the suggested product category for all selected products:
  1. Above the product list, click Accept and save.
  2. Click Accept and save all.
- If suggestions are provided but need to be adjusted, then search for and select a product category for selected products:
  1. In the Product category box of the item that needs adjustment, start typing a description of the product.
  2. Click the product category when the correct suggestion is offered.
  3. Click Save.
- If suggestions aren't provided, then search for and select a product category for all selected products:
  1. Above the product list, click Choose category.
  2. In the Choose category box, start typing a description of the product.
  3. Click the product category when the correct suggestion is offered.
  4. Click Accept and save all.

Select a product category by using a CSV file

You can import product categories using a CSV product import. To verify that your product category values matches Shopify's predefined list, refer to Shopify's Standard Product Taxonomy.

You can download and view a sample product CSV file to use as a template.

Tax calculation by using product categories

After you categorize your products, the categories are used to automatically determine your tax obligations when selling into a particular region. Using product categories increases the accuracy of tax calculations, and reduces the need for tax overrides.

If you set a product category for a product that has an override in place, then the override takes precedence over product category tax calculations. This includes collection-based tax overrides. Consider removing any product tax overrides that conflict with your product categories. However, if you're aware of tax rules that aren't calculated by product categories, then keep your product tax overrides.

You're not required to use product categories. If you choose not to apply product categories to your products, then you need to use tax overrides and manually update them.

Limitations

There are some situations in which product categories can't be used to calculate taxes:

Industry specific or product specific taxes that result in a separate tax line item, such as e-waste fees.
Taxes that are based on volume, weight, ingredients, or size, such as excise taxes.
Variants of a single product can't have different product categories.
Bundled goods that are created as a single product have a single product category.
Product categories don't sync between Shopify and marketplaces, such as Meta or Google.
Products and categories with tax overrides.
Product categories aren't applied to orders that don't qualify for Shopify Tax, which include:
- Third-party app and API-generated orders, such as Buy Button, Facebook and Amazon orders.
- Orders that contain one or more products with an associated product or shipping rate tax override.
- Resort Tax is not automatically included in Shopify Tax's calculations. If you need to add Resort Tax to your transactions, then you need to use Manual Tax.

Testing tax calculated by using product categories

Because there isn't a way to preview specific tax rates, it's best to create draft orders to validate that your products are taxed as expected. If the resulting tax calculation isn't what you expect, then review the product category to ensure that it's accurate. For help setting your product categories, contact Shopify Support. If you're not sure that you've set the correct product categories, then contact a tax professional.

Shopify Tax EU and UK pricing

For complete information on Shopify Tax pricing, refer to the pricing overview page for all regions.