Remove VAT from Shopify Checkout for Business Customers

Discover how to automatically remove VAT in Shopify checkout for B2B customers. Compliant, fast and without manual work.

eu tax exemption app

The VAT Problem in Checkout

A French company places an order worth €850 in your cart. They go to checkout and see: €1,028.50 (incl. 21% VAT).

They know they don’t have to pay VAT. Reverse charge - they handle VAT in France. But Shopify just leaves that €178.50 VAT there.

What happens?

  • 40% drop off (too expensive, too unclear)
  • 30% email your support (“how do I get VAT off?”)
  • 20% order and ask for refund afterwards
  • 10% just order with VAT (your problem later)

The result: lost orders, frustration and extra work. And this while you simply need to remove that VAT according to EU regulations.

Why Shopify Doesn’t Do This Automatically

Shopify is made for retail - selling to individuals. The tax engine does three things:

  1. Recognizes customer’s country
  2. Applies correct VAT rate
  3. Calculates total amount

What it doesn’t do:

  • Distinguish between individual and business
  • Validate VAT numbers
  • Apply VAT exemption for businesses

You need to solve this yourself.

Three Ways to Remove VAT

Option 1: Customer tags (free but limited)

How it works:

  1. Customer creates account
  2. You manually give them “tax exempt” tag
  3. From now on they pay no VAT

The big problem:

  • Only works for existing customers with account
  • New business customers pay VAT on first order
  • 60% of B2B buyers use guest checkout

Real-world example:

New German wholesale customer finds you via Google. Orders €2,000. Sees €2,420 (with VAT). Thinks: “Too expensive” or “This doesn’t make sense”. Doesn’t order.

You miss the sale.

Later he emails: “I’m a business, why VAT?” Now you have to explain that he first needs to create an account, then you give tag, then he can reorder.

Chance this happens? Small.

When it works:

  • You have 5-10 regular B2B relationships
  • They order monthly
  • They’re OK with creating account

For all other cases: not practical.

Option 2: Shopify Scripts (expensive and complex)

Requirements:

  • Shopify Plus (€2,000+/month)
  • Ruby knowledge
  • Maintenance with every Shopify update

Example script:

if customer && customer.tags.include?('B2B')
  Input.cart.line_items.each do |line_item|
    line_item.change_line_price(
      line_item.line_price * 0.79, # Remove 21% VAT
      message: "B2B - Excl. VAT"
    )
  end
end

Why this isn’t ideal:

Technical:

  • Scripts don’t validate VAT numbers
  • You have to track who is B2B yourself
  • Doesn’t work for guest checkout
  • Breaks with Shopify updates

Compliance:

  • No VIES validation = not compliant
  • No automatic documentation
  • During audit: no proof

Costs:

  • €2,000/month for Shopify Plus
  • Developer costs for setup/maintenance
  • Total: €2,500+ setup, €2,100+ per month

Note: Shopify is phasing out Scripts. Checkout Extensibility is the future, but doesn’t yet have full tax features.

The Tax Exemption App solves the core problem: automatically remove VAT for valid business customers, in real-time, during checkout.

The difference:

TraditionalWith EU Tax Exemption App
Customer sees €1,210Customer sees €1,210
Customer thinks: “Too expensive”Customer enters VAT number
Customer leaves siteVAT disappears → €1,000
Or: orders and emails laterCustomer orders directly
You have to refundDone

What happens behind the scenes:

Second 0: Customer arrives at checkout

  • Total: €1,210 (incl. VAT)
  • Widget appears: “VAT number (optional)” EU Tax Exemption App Widget

Second 3: Customer types: DE123456789

  • App sends number to VIES database
  • VIES responds: “Valid”

Second 4:

  • VAT disappears from screen
  • New total: €1,000
  • Green message: ”✓ VAT exemption applied”

Second 5:

  • Customer pays €1,000
  • Order comes in
  • Validation documented

No extra steps. No refund. No support tickets.

Setup in 5 minutes:

  1. Install - Click here and follow wizard
  2. Customize - Choose colors and texts that match your shop
  3. Test - Do a test order with VAT number
  4. Live - Done

Live Example

See how it works for a customer:

Common Mistakes

Mistake 1: Remove VAT for everyone

Some merchants think: “Just make VAT 0% for EU”.

Why this is wrong:

  • You must calculate VAT for individuals
  • Only businesses with valid VAT number get exemption
  • Otherwise: tax evasion

Consequence: Back taxes + fine during audit.

Mistake 2: Let customer email after order

“Just order, we’ll handle VAT later.”

What happens:

  • Customer orders €5,000 + €1,050 VAT = €6,050
  • You have to refund €1,050
  • Cash flow problem with large orders
  • Extra administration
  • Bad experience for customer

Better: Correct price directly in checkout.

Mistake 3: Trust customer without check

“If they say they’re business, I believe them.”

Risk:

  • Individuals can pretend to be business
  • During audit you must have VIES proof
  • No proof = you still pay VAT

Correct: Always validate via VIES.

Mistake 4: No documentation kept

“I checked it, don’t need to save it right?”

Reality:

  • Retention period 7 years
  • Tax authorities can check anytime
  • Without proof: back taxes + fine

Solution: Automatic system that logs everything.

VAT Exemption for Specific Situations

Wholesale with regular customers

Scenario: You sell to 20 regular resellers in the EU.

Problem with customer tags:

  • You have to manually tag 20 customers
  • New wholesale customers pay VAT on first order
  • For each new customer: manual process

With EU Tax Exemption App:

  • First order: customer enters VAT number
  • Next orders: automatically recognized
  • Dashboard: overview all wholesale orders

Mix B2C and B2B

Scenario: You sell to both individuals and businesses.

Solution:

  • Widget is optional
  • Individuals leave it empty → pay VAT
  • Businesses fill in number → no VAT
  • No confusion, everyone sees correct price

International marketplace

Scenario: Customers from all 27 EU countries.

Challenge:

  • Each country has different VAT number format
  • Different languages
  • Different VAT rates

EU Tax Exemption App:

  • Automatically recognizes all EU formats
  • Multilingual widget (6 languages)
  • Applies correct exemption per country

Costs & ROI

Scenario: 15 B2B orders per month

Without automation:

  • Support time: 15 × 20 min = 5 hours × €30 = €150
  • Processing refunds: 3 hours × €25 = €75
  • Lost sales (estimated 25%): 4 orders × €75 margin = €300
  • Total loss: €525/month

With EU Tax Exemption App:

  • App costs: €9.99/month
  • Time saved: 8 hours
  • Extra conversion: +4 orders = +€300 margin
  • Net profit: €290/month

ROI: 2,900% per month

Compliance Requirements

For legal VAT exemption you must:

✅ Validate VAT number via VIES database ✅ Validate before delivery ✅ Keep proof minimum 7 years ✅ Document per order: number, date, status

Frequently Asked Questions

Does VAT exemption work with discount codes? Yes. Order: first VAT off, then apply discount.

What about VIES database downtime? EU Tax Exemption App has fallback. You can manually validate and this is logged.

Can I hide the widget for individuals? The widget is always visible but optional. This is actually good - so business customers know they can get VAT exemption.

How fast does validation work? Real-time, 1-2 seconds. Customer sees the new amount immediately.

Does this work with Shopify POS? No, only online checkout. For POS you need other solutions.

Next Steps

You’ve now seen three options to remove VAT. Which fits you?

Customer tags → Max 5 regular customers, small volume Shopify Scripts → You have Plus and developer budget EU Tax Exemption App → 5+ business orders/month, want automation

For most merchants automation is the only practical solution.

Start today: Install EU Tax Exemption App →

Learn more:

Last update: October 2025