Hi, we have a problem in our shop where the VAT is not calculated correctly at checkout.
In Germany, the product costs €22 including €1.44 VAT (7%).
When I switch to Austria, the product costs €22.19 including €2.02 VAT (10%).
However, this is completely wrong, as it should actually be €22.62.
I suspect that in Austria it’s using the wrong net price and then calculating the VAT incorrectly.
The net price there is €20.57 + €2.02 = €22.59~.
Unfortunately, I’m at my wits’ end and can’t figure it out.
I’ve already tried so many settings, and nothing has worked…
Hi @MarcBB ,
Go to Shopify Admin → Settings → Taxes and duties
Click European Union
Make sure ( Include tax in prices ) is enabled
Enable Include or exclude tax based on customer’s country
Ensure Charge tax on this product is ticked for the product.
Check your product’s tax category : use Reduced rate (7%) in Germany and make sure Shopify has correct mapping for Austria (10%).
After changing, test by:
Clearing cookies/session in a private browser window.
Adding the product to cart while your shipping address is Austria.
I’ve already tried those settings but it does not work properly…
What I dont get is that Shopify calcuates the Vat correctly, but with the wrong net price for some reason
Apologies for the laziness but I’m going to copy-and-paste my reply to another post from someone similarly wrestling with Shopify Tax charging the expected/desired VAT rate.
My short and sweet advice is to contact Shopify support about this, and have ready a list of orders (test ones or real ones) that clearly show the problem you’re trying to solve.
They’ll help you work out either:
Which combination of settings will do what you want, or…
That there isn’t a combination of settings that’s designed to do what you want, or…
That there’s a bug.
In the last 3 months I’ve reported 3 pretty big bugs with Shopify Tax and how it’s handling cross-border VAT for all of my clients that collect VAT on orders going into the EU and the UK. Shopify support confirmed they’d already fixed the first bug by the time I reported it, they rolled out a fix for the second bug off the back of my report, and they’re currently investigating the third.
All of this is to say that if Shopify Tax is doing something unexpected, it’s not necessarily because you’ve set it up wrong. As I explained to a new client recently:
All this tax stuff is super-complicated to begin with.
Shopify Tax gives so much control that it makes some things seem far too easy, and other things seem much more complicated than they actually are.
As much as Shopify has MASSIVELY expanded its tax features (and in general all the new cross-border VAT and duties stuff is impressive), it all still seems to be built on top of their original overly-simplistic idea that “charging tax” on a product is a “yes” or “no” checkbox. I’ve been working with Shopify for over 10 years and charging different VAT rates has required various different work-arounds. The latest work-around seems to be that we should trust their AI to decide the VAT rate based on the Product Category, despite the fact that the Shopify Product Category Schema is built on top of the Google Shopping schema that was never designed around VAT rates, and even though Shopify’s version has more specific categories, it’s still not the right tool for the job.
