Shopify Tax

Note

This guide is for merchants who use Shopify Tax calculations to sell in the United States, European Union, or United Kingdom. If you set your tax rates manually, then refer to Manual tax settings.

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 you file and remit your taxes correctly.

Shopify Tax offers the highest level of sales tax compliance with the least amount of upkeep for merchants that sell to customers in the United States, European Union, and United Kingdom. The following features are available when using Shopify Tax:

Shopify Tax in the United States

• Sales tax liability insights decode each state's tax regulations to help determine where you might be required to collect taxes.
• Rooftop accuracy uses precise calculation technology to collect tax based on your customer's specific address within 11,000+ US tax jurisdictions. This improvement over zip code-based calculations better captures tax rates that can vary within regions, and helps to prevent additional costs when inaccurate tax calculations occur.
• Product categories automatically suggests categories for each of your products that you can review, approve, or revise, and then applies the most accurate tax rate for that product based on your customer’s local tax rules.
• Enhanced sales tax reporting can help to make filing easier by providing filterable sales data, enabling you to generate reports ready to send in to each jurisdiction.

Shopify Tax in the European Union and United Kingdom

• Tax liability insights help to determine where you might be required to register and collect taxes, based on each country's tax regulations and VAT thresholds.
• Product categories automatically suggests categories for each of your products that you can review, approve, or revise, and then applies the most accurate value-added tax (VAT) rate for that product based on your customer’s local VAT rules.
• When activated, VAT invoices can be automatically generated and displayed on order confirmation pages for all eligible orders to ensure compliance with VAT regulations.

You can also choose to manage your taxes manually by using default tax rates or by setting and updating tax rates yourself. This option requires significantly more work by you to keep tax rates up to date and to monitor regulation changes, and might expose your business to more tax liability and compliance issues. Learn more about your US, EU, and UK tax options, and how to switch.

Shopify Tax is also available for in-person sales through Shopify POS. If you have Shopify Tax activated for your online store, then it's automatically activated for all of your retail locations. Learn more about setting up taxes on Shopify POS.

In this section

• Considerations for using Shopify Tax

• Product categories

• Choose a tax service

• Estimated taxes during checkout

• Shopify Tax pricing

• Update email notifications

• Shopify Tax features for the European Union and United Kingdom

• VAT invoices for the European Union and United Kingdom

• Automated filing with Shopify Tax