How to calculate VAT on shipping for multiple tax levels in the EU?

Accounting & Taxes
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Topic summary

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.
8

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.

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https://help.shopify.com/en/manual/taxes/shipping-tax