EU merchants face a critical VAT compliance issue when selling products with different tax rates (e.g., food at 12% and merchandise at 25%). According to EU law, shipping VAT must be proportionally split based on the tax rates of items in the order, and this breakdown must appear on customer receipts.
Example scenario:
Order contains €100 food (12% VAT) and €50 merchandise (25% VAT)
€15 shipping fee should split: €10 at 12% VAT and €5 at 25% VAT
Current Shopify behavior applies incorrect shipping VAT rates
Current status:
Multiple merchants confirm this affects anyone selling mixed-rate products in the EU
One participant reports Shopify’s US team is investigating, but expresses doubt about resolution
Shopify’s Help Center documentation mentions this feature but provides no activation instructions
No native Shopify solution exists; merchants must handle this manually or seek third-party apps
One developer is building an app to address this issue
Shopify Tax has been suggested as a potential fix, though it requires transaction fees
Merchant sentiment:
Strong consensus that this is a fundamental compliance feature that shouldn’t require paid apps. Some merchants express willingness to pay thousands annually for a working solution due to the risk of overpaying taxes and compliance violations.
Summarized with AI on October 25.
AI used: claude-sonnet-4-5-20250929.
Basically the problem is the following:
(This questions is applicable in EU)
The ordinary rule of charging VAT on shipping is that the VAT on the shipping fee should be the same as the goods that you sell.
The issue occurs when selling products on different tax levels i.e. Food (12% VAT) and merchandise (25% VAT) then the VAT should be spilt by the amount of VAT charged for the items in the order.
So as an example I’m selling food for 100 euros and merchandise for 50 euros within the same order. The total sum is charged 150 euros but the VAT is 12% on 100 euros and 25% on 50 Euros.
Weighted, this is roughly a 67%/33% split for the total som charged for VAT. And this should then be applied for the tax on shipping,
If I charge 15 euros for shipping, then 10 euros should be charged with a 12% tax and 5 euros should be charged with 25% tax.
The problem by law in EU, is that the VAT should be visible on the receipt that the customer receives and should reflect this split between taxes. (12% and 25%)
Has anyone found a way to integrate this function into the platform either by tax overrides or found a third party application that solves this issue? I don’t want to spend any manual labor on doing this as it would probably fill my days…
I’m currently working on a shopify app that could solve this issue. However in this first phase I’m currently validating this issue and need your help!
I would love to hear some feedback from you and if I could propose possible solutions to you in a scheduled call (max. 20minutes). Feel free to reach out at cka.29@icloud.com
Yes this is still an issue that Shopify doesn’t clearly understand that we need in EU. I guess that this is actually an issue for everyone selling goods within different tax-levels in EU. Should be a substantial sum to save for a company if you get this right instead of overpaying taxes. I will reconnect by email.
@Shopify_77 any news on this topic? Seems like the whole EU shipping tax calculation is incorrect if product tax overrides are applied. That could be a major downgrade to Shopify if this makes waves…
These kind of basics should not be solved through an app. I don’t think EU merchants are willing to pay an app just to get their shipping tax calculated the right way.
No news yet. Latest I heard is that the US-team is looking into it but i highly doubt it. I agree that this needs to be sorted internally within the shopify system and should not require and third parties to sort out right shipping estimates. I don’t want an app to sort out this basic (and important for book keeping) topic to guestimate whats right and not. I’m still waiting for a solution unfortunately…
Having this same issue. In Sweden, for example, all books are taxed at 6 % instead of normal VAT 25 %. Local regulations state that shipping VAT should either follow the main VAT of the order (i.e. the VAT category with the largest sale value on the order) or be split out based on actual amounts for each VAT category.
But currently, when I try to order only a book, it sets the VAT for the book to 6 % due to my override, and then 25 % for the shipping. Even though there are no items in the basket that have VAT 25 %.
There is even a section on this in the Help Center, but no information on how to activate it.
Another EU merchant facing the issue here (me). Any solution out there ? I am told using Shopify Tax might fix this, if we are willing to pay a % of transaction fees.
