Remove VAT from shipping when selling B2B to other EU country (apps only remove VAT on products)

Accounting & Taxes
1

Hi!

I am wondering if there is a way to have Shopify remove the VAT on the shipping fee as well when dynamically changing the VAT on the products. We are located in Germany and selling to companies throughout the EU. We tried a bunch of EU VAT apps and they either add a discount to the checkout or actually reduce the product price to reflect the VAT but none seems to touch the shipping fee, it stays the same, which shouldn’t be the case.

I had a look in the tax settings and the “charge VAT on shipping” box is ticked, it also says that it should be calculcated automatically but that actually doesn’t seem to be the case, it just sticks with the pre-set shipping fee (e.g. 5.99 Euros), no matter if there is a tax exemption or not.

Any idea how I get Shopify (or any of the EU VAT apps) to also deduce the VAT on the shipping?

Many thanks

Alex

4

Thanks to both of you. I have now figured out a way how to at least get the correct amounts imported to our external ERP tool so for now it seems that it should work. I will keep an eye on it for the next couple of days to figure out if my solution works.

Many thanks

Alex

5

hiii @buzzwire

In Shopify shipping rates are tax-inclusive if you set them that way and when VAT is dynamically removed for EU B2B customers (reverse charge VATexempt), Shopify does not automatically recalculate or reduce the shipping price. Most EU VAT apps only adjust line items not shipping.

The charge VAT on shipping setting only controls whether shipping is taxable not whether VAT is removed from a tax-inclusive shipping price.

Workarounds

Use tax-exclusive shipping rates recommended for B2B
Or create separate B2B shipping profiles/rates without VAT
Shopify Plus custom checkout logic Scripts Functions

thanks

7

This is a very common Shopify limitation for EU B2B stores.

A lot of VAT apps only adjust product taxes, but shipping VAT often stays unchanged because Shopify does not always recalculate shipping correctly after exemption is applied.

Especially with: • tax-inclusive pricing
• reverse charge flow
• intra-EU B2B orders

We recently worked on solving this exact issue by recalculating VAT exemption properly for both products and shipping in the B2B flow.

Might help: VATify ‑ Smart EU VAT Exempt - Validate EU VAT numbers and automate B2B tax exemption. | Shopify App Store