Incorrect Tax Application on Shipping for Mixed Tax Rate Products

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Dear Community,

I am reaching out from our business based in Germany, where we operate under the Shopify platform to sell a variety of products. In compliance with German tax law, our product range includes both artistic items, taxed at 7%, and non-artistic items, taxed at the standard rate of 19%. It is my understanding that Shopify's default setting for sales tax for German stores is set to 19%.

According to German tax regulations, it is mandatory to apply the same VAT rate to shipping costs as is applied to the products in the customer's order. For instance, if a customer purchases an artistic item with a 7% VAT rate, the shipping for this order must also be charged at the 7% rate. Conversely, if the order comprises items taxed at 19%, the shipping should equally bear a 19% tax rate.

However, we recently encountered an issue where the system did not follow this rule. Specifically, in an order containing a product taxed at 19%, the shipping tax was automatically set by Shopify at 7%. This is not only against the German tax law requirements but also disrupts the logic of aligning the shipping tax rate with the products included in the order.

Could you please assist us in resolving this issue? We need guidance on how to configure Shopify so it automatically applies the correct tax rate to shipping costs, ensuring compliance with German tax law and avoiding any discrepancies in tax collection.

Your prompt assistance in this matter would be greatly appreciated, as it is crucial for our business to adhere to tax regulations accurately.

Thank you for your attention to this matter.

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