Merchant weighing opting out of Shopify Tax (auto-enabling from Oct 28) due to using EAS (third‑party EU VAT solution) asks about UK VAT invoices and VAT display at checkout.
Key clarifications:
VAT invoices: Shopify Tax can generate VAT‑compliant invoices (must be enabled). If you opt out, Shopify‑generated invoices stop, but you can still use third‑party apps or an ERP to issue VAT invoices.
Regional control: Tax service and features (e.g., VAT invoicing) can be set per region. You can keep Shopify Tax + VAT invoices in the UK and use Basic/Manual Tax in EU/US, or mix as needed.
Checkout VAT: Basic Tax will charge VAT but lacks product‑type automation. Shopify Tax offers higher compliance, auto reduced/zero rates by product category, and proportional VAT on shipping in the UK/EU.
Current status and rollout:
Shopify Tax is free until year‑end; VAT invoicing must be switched on. Rollout is incremental this week; some stores can’t enable yet.
Opt‑out form doesn’t allow region‑specific opt‑outs; PM will double‑check and follow up.
Open items:
Handling of temporary local tax reductions (e.g., German solar panels) under review.
Webinar planned; partners invited to share shop IDs for testing.
Notes: VAT = Value Added Tax; ERP = enterprise resource planning; EAS = third‑party VAT app. Discussion ongoing.
Summarized with AI on December 15.
AI used: gpt-5.
I recently received the notification about Shopify Tax being automatically applied to my store starting on October 28. I’m currently using a third party application (EAS) for EU VAT registration, reporting, and filing, but I need some clarity on what happens if I decide to opt out of Shopify Tax and switch to Basic Tax.
My main concern is ensuring compliance with UK VAT requirements, especially regarding VAT receipts for UK customers. Specifically:
Will I lose the ability to generate VAT-compliant invoices with the necessary VAT breakdowns and my VAT number for UK customers, if I opt out of Shopify Tax?
How will Basic Tax handle VAT at checkout for UK and EU customers? Will I still be able to display accurate VAT rates? At the moment, I manually set the VAT rate with guidance from EAS for our EU markets
I want to avoid any disruption to VAT invoicing or checkout functionality, as these are critical for my business. Has anyone else opted out of Shopify Tax and had to manage VAT compliance manually or through another solution?
Any advice from fellow merchants or insights from the Shopify team would be greatly appreciated!
Will I lose the ability to generate VAT-compliant invoices with the necessary VAT breakdowns and my VAT number for UK customers, if I opt out of Shopify Tax?
Shopify Tax will generate VAT invoices for you (separate setting within admin). If you leave Shopify Tax, the ability to continue to generate will indeed be severed. However, no matter your choice in tax service, you can use any app in the App Store (or your ERP) to generate VAT invoices.
How will Basic Tax handle VAT at checkout for UK and EU customers? Will I still be able to display accurate VAT rates? At the moment, I manually set the VAT rate with guidance from EAS for our EU markets
Shopify Tax is higher compliance than Basic and Manual Tax. It uses your product categories to automatically reduce or zero rate goods (as applicable) and applies VAT on shipping proportionally. Further enhancements are planned.
Thanks for the clear response—really appreciate it!
Just to be certain, my main concern is maintaining the ability to generate VAT-compliant invoices with the necessary breakdowns and my VAT number for UK customers. If I opt out of Shopify Tax specifically for EU markets but still want to keep this function active for UK customers, would that be possible?
Or, if I opt out entirely, would using a third-party app be the only solution to keep UK VAT invoicing compliant?
We’ve built Shopify Tax to allow you to turn features (eg VAT invoicing) on or off by “region” and to choose a tax service (eg Shopify Tax, Basic Tax, Manual Tax) separately in each region.
If you wanted to be on Shopify Tax in US, EU, and UK but only turn on VAT invoices in the UK, this is possible.
If you wanted to be on Shopify Tax and use VAT invoices only in the UK and be on Basic Tax for the rest, this is also possible.
It is free until the end of the year (and VAT invoices must be specifically set to on) so you do have 2+ months to give it a try before having to make that decision.
thanks for your help here @mcrawford . We have 2000 clients using our app in Germany for accounting and bookkeeping. We tried to test the invoicing feature in order to provide them guidance, but it seems although we have the 29.10 the invoice feature cannot be manually enabled (or we do not find the option to enable it in the 4 live stores we have access to?)
@mcrawford thanks, but I would appreciate it if we could keep this topic in the community as a reference for merchants who might have the same question. I would also like to highlight that @pathway_team (pathway) App is the only (known) invoicing tool for German merchants that calculates the shipping taxes correct. When merchants offer regular and reduced tax-rated products, the shipping tax is calculated with the ratio of these tax rates. This is something Shopify Tax does seem to consider.
Shipping taxes are calculated proportionally (the ratio as you describe) in both the UK and EU on Shopify Tax, yes!
In terms of keeping in the community, happy to provide an update here but there’s nuances that I’d like to connect with you on to further understand (there’s multiple different regulations about taxing solar panels).
Hello @pathway_team - thanks for giving Shopify Tax a test run. We’re rolling out incrementally this week so it may take up to Friday for these stores to be upgraded. I’ll send you an email and we can get one of your stores on it and connect you with the Product team who can answer any questions.
Be on the lookout as well for a partner webinar planned soon.