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Setting up VAT in Shopify for a store in Spain

Published on · Reviewed on · Online stores · 7 min read

Shopify works out the VAT on each order from what you configure. If the configuration is wrong, it charges the wrong amount, and the mistake reaches your Form 303 multiplied by every order in the quarter. Here is where each setting lives for a store in Spain, taken from Shopify's official help, and what to check afterwards.

One warning before you start, from Shopify itself: you can use it to automate tax collection, but you cannot use Shopify to file or remit taxes. Which VAT you have to charge is set by the law, not by the store. Shopify only applies it.

1. Which tax service your store uses

Shopify has several ways of calculating taxes. According to its help, in the European Union Basic Tax is only available if your store was set up to collect taxes there before 13/05/2026; otherwise you can use Shopify Tax or manual tax settings. Manual settings have limits: among other things, they do not include VAT invoices or tax exemptions for businesses, and their rates do not update themselves.

2. Your VAT registration in Spain

The steps, according to Shopify's help:

  1. In your admin, go to Settings > Taxes and duties.
  2. Under Regional settings, click European Union.
  3. Under Collect VAT in an EU country, click Collect VAT.
  4. Choose the country where you are registered for VAT, Spain, and enter your VAT number.

3. If you sell to consumers in other EU countries

In the same European Union section there is Collect VAT cross-border, with two options that Shopify explains like this:

  • Collect using your home country registration (micro-business): if your sales to other EU countries add up to €10,000 or less, you charge your own country's VAT.
  • Collect using a One Stop Shop (OSS) registration: if you go over it, or if you choose to charge the customer's country's VAT, you register for the One-Stop Shop and enter that registration.

Shopify warns that the micro-business exemption does not support additional VAT registrations in other countries. And it makes clear that working out whether you go over the threshold is your responsibility. How that threshold is counted is explained in the article on the EU VAT One-Stop Shop.

4. Prices including VAT

If you want the price you enter on each product to be what the customer pays, with VAT inside, in Shopify you turn it on in Settings > Taxes and duties, with the option Include sales tax in product price and shipping rate. With it, Shopify takes the tax out of the price with the formula Tax = (Tax rate × Price) / (1 + Tax rate).

Shopify reminds you that your store address sets your origin tax rate, which is the one it deducts from tax-inclusive prices when you sell to another country with prices that also include tax.

5. Products with a reduced VAT rate

If you sell something that is not at the standard rate, you have to tell Shopify. Its help gives two routes:

  • With Shopify Tax, product categories, which Shopify says remove the need for most overrides.
  • With a product override: you create a collection with those products and, in Settings > Taxes and duties, under the tax region, you add an override with the collection, the region and the rate.

Which rate each product carries is set by the Spanish Tax Agency, not the store: check its VAT rates page before adding an override.

6. VAT on shipping

In the European Union, according to Shopify, shipping is taxed where applicable regardless of the option to charge taxes on shipping rates. If an order mixes products with different rates, Shopify works out the shipping tax in proportion to each rate, so it can come out as a percentage that is none of yours. That is expected.

But there is a detail its help points out: if you use product overrides, the shipping for those overridden products is charged at the country's standard VAT rate, not the override rate. Under the Spanish VAT Act, what you charge for shipping is part of the taxable amount of the sale (article 78.Dos.1.º). If you sell reduced-rate products with overrides, check the VAT on shipping in a test order and discuss it with your accountant.

7. Sales to businesses in other EU countries

Shopify has an option it calls the reverse charge exemption: it shows a field at checkout for the business's VAT number, validates it and, where applicable, does not charge VAT and adds a note to the invoice. According to its help, validation at checkout is only available with Shopify Tax, and the exemption depends on the destination country being different from that of the location you fulfil the order from.

Under Spanish law, a sale of goods to a business in another EU country with a valid number is an exempt intra-Community supply, and it also has to be reported on Form 349. Shopify not charging VAT does not exempt you from reporting it: we explain it in selling to businesses in other EU countries.

8. Rounding

With the EU tax features, Shopify rounds tax line by line and then adds it up. Its example: 42 items at €14.99 with 20% give €126.00 of tax rounding per line, and €125.92 rounding the total. Keep it in mind if you compare Shopify's reports with another program.

9. Before you call the setup done

  • Place a test order with an address in mainland Spain and check that each line and the shipping carry the VAT you expect.
  • If you sell reduced-rate products, test one on its own and one mixed with another at the standard rate.
  • If you sell to other EU countries, test an address in another country and check which VAT it charges based on your registration.
  • If you ship to the Canary Islands, Ceuta or Melilla, first read which VAT applies and test an order there too.
  • If Shopify generates invoices and you also invoice with another program, decide which one issues the invoice for each sale: one sale, one invoice.

To see what each order leaves you once VAT is taken out, use the order profit calculator.

Sources

This article explains the general rule with its official sources. Your case may have exceptions: it doesn't replace your accountant.

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· TaxesSelling to businesses in other EU countries without VAT: VIES, invoice and Form 349When a sale of goods to a business in another EU country is VAT-free, how to check its number in VIES, what goes on the invoice and how to report it under key E. · Online storesSetting up VAT in WooCommerce for a store in SpainHow to turn on taxes in WooCommerce, set up VAT classes and rates, what happens with shipping and what it lacks out of the box, according to its official documentation. · TaxesThe EU VAT One Stop Shop (OSS) for online storesThe EU-wide €10,000 threshold, registering with form 035, filing Form 369 each quarter and what to check in your store to charge the right VAT.