Shopify VAT France: How to Correctly Configure Your Store
Shopify is powerful but its VAT configuration can be misleading. Here's how to set up your store to comply with French tax authorities.
Introduction: Shopify and VAT, a Complicated Relationship
Shopify has become the go-to platform for launching an e-commerce store. But when it comes to VAT, many French merchants find themselves lost.
Shopify's default settings are designed for the American market, where tax works differently. Result: poorly configured French stores, VAT errors, and sometimes avoidable tax adjustments.
Watch Out for Default Settings
The Basics: Configuring French VAT
Step 1: Enable Taxes for France
In Settings > Taxes and duties, verify that:
- France is in your tax zones
- The standard VAT rate (20%) is correctly configured
- Reduced rates are set up if you sell applicable products
Step 2: Display Prices Including VAT
French consumers expect to see prices including VAT. Configure:
- Include tax in prices: Enabled
- Price display: Including VAT by default
Selling in Europe: OSS Configuration
Since July 2021, B2C sales to other EU countries require special attention.
The €10,000 Threshold
Below €10,000 in annual sales to other EU countries, you can apply French VAT. Above that, you must apply destination country VAT.
Shopify Configuration for OSS
Common Pitfalls to Avoid
Pitfall #1: Prices Excluding VAT Shown to French Customers
A French customer sees €100, arrives at checkout and discovers €120. This is illegal (obligation to display VAT-inclusive prices) and disastrous for conversion.
Pitfall #2: Poor B2B Sales Management
When a European business customer provides a valid VAT number, you should not charge VAT (reverse charge).
Pitfall #3: Confusing Shipping and Destination
VAT depends on delivery location, not your shipping location.
Recommended VAT Apps
For OSS Management
- Avalara AvaTax: Automatic rate calculation by country
- TaxJar: Intuitive interface, reports by country
For B2B VAT Validation
- EU VAT Number Validation: Automatic VIES validation
- Exemptify: Exemption certificate management
Worthwhile Investment
Conclusion: Compliance is an Investment
Correctly configuring VAT on Shopify takes some initial time. But it's an investment that prevents calculation errors, tax adjustments, unhappy customers, and hours of manual reconciliation.
Take time to properly set up your store from the start. Your future self will thank you.