Shopify Business Customer No VAT - Complete Guide

When Can You Not Charge VAT?

You get an order from Belgium. Company X orders €800 worth. Simple question: do you charge VAT?

The answer is: it depends.

• Individual in Belgium → Yes, 21% VAT
• Company in Belgium without VAT number → Yes, 21% VAT
• Company in Belgium with valid VAT number → No, 0% VAT

That last rule is where it goes wrong in Shopify. The system sees a Belgian address and automatically charges VAT. But for companies with valid VAT number this is wrong.

This article explains when you do or don’t charge VAT, and how to automate this in Shopify.

The VAT Rule for EU Sales

Three Scenarios

1. Sale to Individual (B2C)

• Customer: Individual in Germany
• Rule: You charge domestic VAT (21%)
• Customer pays: €1,210 for product of €1,000

2. Sale within Your Country (B2B)

• Customer: Domestic company
• Rule: You charge domestic VAT (21%)
• Customer pays: €1,210, deducts VAT in own return

3. Intra-Community Supply (B2B EU)

• Customer: German company with valid VAT number
• Rule: No domestic VAT (reverse charge)
• Customer pays: €1,000, handles VAT in Germany

Why These Rules Exist

The principle is simple: VAT is paid in the country where the product is consumed.

For individuals: You are responsible for VAT For companies in other EU countries: They are responsible for VAT

This is called the reverse charge mechanism. Instead of you charging domestic VAT and the German customer reclaiming it later, the German company directly handles German VAT. More efficient for everyone.

Source: EU VAT Directive Article 138

The Conditions: When You Really Cannot Charge VAT

You can only not charge VAT if all conditions apply:

1. The customer is a business

Not just a claim “I’m business”. You need proof.

2. The business has a valid VAT number

Valid means:

• Registered in VIES database
• Active (not deregistered)
• Matches company name

3. You validate the number via VIES

You must check on ec.europa.eu/taxation_customs/vies. A customer who says “my number is X” is not enough.

4. You document the validation

During audit you must be able to demonstrate:

• Which VAT number
• When validated
• What VIES responded
• For which order

5. It’s another EU member state

Your country → France: no VAT Your country → Your country: yes VAT Your country → US: different rules (export outside EU)

Missing one condition? Then you must charge VAT.

The Shopify Problem

Shopify’s tax engine is black and white:

• It sees an EU country → It charges VAT
• That’s it

There is no:

• ❌ Detection of B2B vs B2C
• ❌ VAT number validation
• ❌ Automatic exemption
• ❌ Documentation of validations

What happens in practice?

Scenario A: Individual from France

• Shopify: €1,210 (correct ✓)
• Customer: Pays and done

Scenario B: Company from France

• Shopify: €1,210 (wrong ✗)
• Customer: “This isn’t right, I shouldn’t pay VAT”
• You: Start manual process

And that manual process costs time.

Three Solutions Compared

	Manual	Customer Tag	EU Tax Exemption App
New customers	After order	No (needs account first)	Direct at checkout ✓
VIES validation	You do this	You do this	Automatic ✓
VAT exemption	Refund afterwards	Tag beforehand	Real-time ✓
Documentation	Manual tracking	Not built-in	Automatic ✓
Time per order	15-20 minutes	5 minutes setup	0 minutes ✓
Suitable for	< 2 orders/month	5-10 regular customers	Any volume ✓

Automate with EU Tax Exemption App

The Tax Exemption App automates the entire process: from VAT number input to VIES validation to documentation.

What Happens with Each Order

Without app:

Order arrives → Customer paid VAT
↓
Customer emails: "I'm business"
↓
You check VAT number on VIES
↓
You create credit note
↓
You refund
↓
Time: 15-20 minutes

With app:

Checkout → Customer enters VAT number
↓
App checks VIES (2 seconds)
↓
Valid? VAT off, invalid? VAT stays
↓
Customer pays correct amount
↓
Validation documented
↓
Time: 0 minutes

See here an example of the widget:

Installation

Full steps in our guide, but TL;DR:

1. Install app (30 seconds)
2. Choose design & colors (5 minutes)
3. Test with dummy VAT number (2 minutes)
4. Live

Video

Recognizing VAT Numbers

Each EU country has its own format. The app recognizes them automatically, but good to know:

Country	Format	Check
NL	NL123456789B01	12 digits + B
BE	BE0123456789	Starts with 0 or 1
DE	DE123456789	Always 9 digits
FR	FRXX123456789	2 letters or digits + 9 digits
IT	IT12345678901	11 digits
ES	ESX12345678X	Can have letter at start or end

Tip: If a customer enters wrong format, let your system show a clear error message. For example: “German VAT number must be 9 digits after DE (DE123456789)“

Common Customer Questions

”Why do I need to provide my VAT number?”

Your answer: “For business purchases within the EU, the reverse charge mechanism applies. You then don’t pay domestic VAT, but handle VAT in your own country. To apply this, we must validate your VAT number via the official EU database."

"I don’t have a VAT number”

Possible reasons:

1. They’re individual → Then they pay VAT
2. They’re small business (< threshold) → Then they pay VAT
3. They’re not EU-based → Different rules

Your answer: “No problem! You can just order. The VAT will then remain on the total amount."

"My VAT number is not accepted”

Check:

• Is the format correct?
• Is the number active in VIES?
• Is it a VAT number (not company registration number)?

Test yourself: Go to VIES checker and test the number. If VIES says “Invalid”, then the number is not valid.

”Can I order as business without VAT number?”

Answer: No. Without valid VAT number we cannot apply VAT exemption. This is a legal requirement.

Compliance: What You Must Keep

During a tax authority audit you must be able to demonstrate:

Per Intra-Community Supply

• ✅ Customer’s VAT number
• ✅ Date of validation
• ✅ Result of VIES check
• ✅ Order number
• ✅ Invoice amount excl. VAT
• ✅ “VAT reverse charge” mention on invoice

Retention Period

• Minimum 7 years
• Directly accessible during audit
• Preferably digital + exportable

EU Tax Exemption App does this automatically. Dashboard with all data, CSV export for your accountant.

Risks of Incorrect Application

Not Charging VAT Without Validation

Scenario: You believe customer on their word that they’re business.

Risk: During audit you can’t demonstrate VAT number was valid. You still have to pay VAT + fine.

Fine: Can amount to 100% of the due VAT amount.

Charging VAT When You Shouldn’t

Scenario: You charge VAT for a valid business number.

Risk: Customer pays too much. If you don’t refund this, and customer complains to tax authorities, you can get problems.

No Documentation Kept

Scenario: You validate, but keep no proof.

Risk: During audit no proof = as if you didn’t validate = back taxes.

Special Situations

Sale to Government

EU government institutions also have VAT numbers. Rule is the same: valid number = no VAT.

Sale to Small Businesses

Small businesses (< threshold) often don’t have VAT number. Then they just pay VAT.

Mixed Orders (B2B + B2C Items)

If a business customer buys both business and private products? Depends on your agreements. Usually: everything business = everything without VAT.

Dropshipping

If you dropship from your country to German businesses: same rule. Valid VAT number = no VAT.

Next Steps

You now know when you don’t charge VAT for business customers. The choice:

Manual → < 3 orders/month, lots of time Customer tags → 5-10 regular customers, manual tagging EU Tax Exemption App → 5+ orders/month, want automation

For growing businesses automation is the only practical choice.

Start today: Try EU Tax Exemption App free →

More guides:

• Complete VAT exemption setup guide
• Remove VAT from checkout
• How to add VAT number field
• Compare best VAT apps

---

Last update: October 2025