Registration-based taxes in the UK

If you're already using Shopify to sell in the United Kingdom, 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 VAT number. After it's been added, tax rates are automatically set that apply in the areas you've registered for.

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 VAT number? Do I need one?

A VAT number, also referred to as a value-added tax identification number (VATIN), is an identifier used in the UK and the EU. It's provided to you by a country's tax authority after you register with them. This number is issued by countries to allow merchants to charge value-added tax.

How do I know if I need to register to charge taxes in the UK?

Typically, you need to register if your sales in the UK sales are equal to or greater than 85,000 GBP within a 12 month period. This threshold applies to merchants located in the UK only. If you're located outside of the UK, then refer to UK taxes and Brexit.

Do I have to register for a VAT number in other countries?

If you intend to sell to countries in the EU, 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, then you can contact that country's tax authorities.

After you've registered, add your VAT number on the Taxes page.

Steps:

  1. From the Shopify admin, go to Settings > Taxes.
  2. In the Tax regions section, beside European Union, click Set up.
  3. In the VAT on sales within the EU section, click Collect VAT.
  4. Select a country in which you are registered.
  5. In VAT number, enter your VAT number.
  6. Click Collect VAT.
  7. Optional: To add more regions and account numbers, click Collect VAT.

You can delete or change your registrations or account numbers with the ... button next to the country name and account number in the Tax registrations section.

Will I be able to override tax settings?

Yes. For more information about how UK 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 VAT member countries 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 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, some of the new laws that apply when selling to customers in the UK include:

  • The sale of goods from UK merchants to EU customers have become exports (the sending of goods from a country or customs union to outside that country or customs union) rather than dispatches (the sending of goods from one EU member state to another EU member state).
  • UK merchants might be required to register for VAT, and to account for import VAT in the EU.
  • VAT registrations might be required across multiple EU member countries depending on a number of factors, including (but not limited to) your supply chain, the location of your customers, and where the goods are delivered.
  • You might need an EU EORI number.

Learn more about the implications of Brexit for your business.

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.

Steps:

  1. From the Shopify admin, go to Settings > Taxes.
  2. In the Tax regions section, beside European Union, click Manage.
  3. In the Shipping to the EU section, next to VAT on sales to the EU, click Collect VAT.
  4. From Registration country, select the country where you registered for IOSS.
  5. In IOSS VAT number, type your IOSS number.
  6. 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 UK taxes.

Ready to start selling with Shopify?

Try it free