New Tax Configuration for EU - What you need to know

Accounting & Taxes

Topic summary

Shopify introduced automated EU VAT tax configuration requiring merchants to add VAT registrations, with the platform automatically calculating taxes across all 27 EU countries. This replaced the previous manual setup where merchants configured rates individually per country.

Major Issues Reported:

  • B2B merchants face significant problems: the system charges VAT to all EU customers by default, requiring manual exemption of each business customer with valid VAT numbers. This creates daily administrative burden and causes cart abandonment when new B2B customers see inflated prices before exemption.

  • Shipping tax bug: In carts with non-taxable products, shipping isn’t taxed even when it should be, while the reverse occurs with taxable products. Shopify acknowledged this as a bug but hasn’t provided a fix timeline.

  • Geographic exceptions: The Canary Islands (Spain) incorrectly charged 21% VAT despite being outside EU VAT territory and requiring 0% rates. No region-specific tax override option exists for new stores.

  • Distance selling thresholds: The system doesn’t account for EU distance selling thresholds (e.g., Austria’s €35,000 limit), forcing merchants to charge VAT before legally required.

  • VIES validation: No automatic verification of whether B2B customers are VIES-registered, requiring manual checks to apply correct VAT rates.

  • Pricing display errors: Tax-exempt B2B customers see correct VAT breakdown but pay unchanged total prices.

Merchants report significant sales losses, particularly for cross-border B2B transactions and non-EU sales. Multiple users await fixes or workarounds, with some noting the issue persists weeks after initial reports. The upcoming July 2021 OSS (One Stop Shop) changes will further complicate requirements.

Summarized with AI on November 19. AI used: claude-sonnet-4-5-20250929.
2

On my opinion this is a critical change in your settings.

In my specific b2B shop, we have daily moderate volumes of new customers and new orders but there are good chances to reach really high volumes soon. But now, this change you have made are influencing our business.

The solution you suggested for B2B is not the right one, please remind that most customers are registering while making their first orders, and anyway we do not have a dedicate person who checks which are the new customers and from where they are ordering.

Please make a fix where we can mass flag which country we do not want to collect VAT, or many of your b2b customers might opt for alternative solutions to shopify

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