If you’re selling across EU countries through Shopify and using CommBilling to manage your invoices, you may encounter a situation where the VAT applied doesn’t match the customer’s shipping country
When running a business in the European Union, applying the correct VAT rate is not just about compliance. It is about maintaining customer trust and ensuring accurate billing. If you’re selling across EU countries through Shopify and using CommBilling to manage your invoices, you may encounter a situation where the VAT applied doesn’t match the customer’s shipping country.
For example, even after entering a French shipping address, your invoice may still apply Belgium’s 21% VAT instead of France’s 20%. This issue often leads to confusion, but the explanation is simple and relates directly to how your VAT registrations are set up in Shopify.
This article explains why this happens and how to configure your store properly to ensure correct VAT calculation for each EU country where you do business.
Why Shopify Applies the Wrong VAT Rate
Shopify doesn’t automatically apply the local VAT rate based on the shipping address unless you’ve explicitly told it to.
By default, Shopify calculates VAT based on:
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Your store’s primary location and tax registration
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The VAT registrations you’ve manually added in your Shopify admin
So, if your store is based in Belgium and you haven’t informed Shopify that you’re also registered to collect VAT in France, Shopify will continue to apply the Belgian VAT rate (21%) even when the customer’s shipping address is in France.
In other words: Shopify needs to know that you're registered in other EU countries before it can apply their local VAT rates.
How to Fix It: Set Up and Apply VAT Correctly Across the EU
To ensure the correct VAT is applied to each invoice, you need to both set up EU VAT collection in Shopify and make sure it is applied based on the customer’s shipping address. If not configured properly, Shopify may default to your store’s local VAT rate even for international EU customers.
Example:
Your store is based in Belgium. You also sell to customers in France.
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If you’ve selected OSS (One Stop Shop) and activated VAT collection:
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A French customer will be charged 20% VAT (France)
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A Belgian customer will be charged 21% VAT (Belgium)
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If you haven’t activated OSS or registered for VAT in France:
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Shopify will charge 21% VAT to all EU customers even those in France.
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Step-by-Step: Configure EU VAT in Shopify
- Step 1: In your Shopify account, click on Settings
- Step 2: Click on Taxes and Duties
- Step 3: Under the Regional Settings section, click on European Union
- Step 4: In the Collect VAT cross-border section, click Collect VAT in European Union
- Step 5: A pop-up will appear asking how you want to collect VAT
Choose one of the following:
Use One Stop Shop (OSS):
Select this option if you're registered under the OSS scheme. Shopify will automatically apply the correct VAT rate based on each customer’s shipping address across the EU. You only need to enter your OSS VAT number once.Use your home country VAT registration only:
Choose this only if you're not registered under OSS and only collect VAT in your home country. Shopify will apply your local VAT rate (e.g., 21% in Belgium) to all EU sales which may not be compliant if you exceed distance selling thresholds in other countries. - Step 6: Click Collect VAT to confirm
So in this situation, If you chose OSS, you're all set. Shopify will now calculate VAT correctly across EU countries.
For complete guidance, see Shopify’s EU tax setup documentation.
If the VAT on your invoices doesn’t match your customer’s country, the root cause is almost always in your Shopify tax setup. Whether you’re using CommBilling or managing invoices another way, accurate VAT starts with proper EU registration and configuration.
By choosing the correct VAT collection method (OSS for simplified EU-wide compliance or individual registrations when needed), you enable Shopify to apply the right rate based on your customer’s location. This not only ensures tax compliance, but also enhances your credibility and professionalism with international clients.
Take the time to configure it once, and you’ll avoid repeated billing issues or legal risk while delivering a seamless, compliant experience to your customers across the European Union.