Digital product taxes

Digital goods are downloadable files or some other kind of electronically supplied product. Consumers living in the European Union (EU) must pay a value added tax (VAT) on digital goods at the rate that applies in their own country, regardless where the seller is located.

But in some jurisdictions, you don't need to charge sales tax on digital products. Check with a local tax expert to make sure you know the requirements in your region.

Exempt a digital product from tax

If you have just a few digital products that are exempt from tax, you can prevent taxes from applying to these individual products. Digital products don't require shipping in a traditional sense, so you can turn off the shipping feature at the same time.

Steps:

1. 打开产品。

2. In thePricingsection, uncheckCharge taxes on this product.

3. In theShippingsection, selectDigital product or service.

4. ClickSave.

Exempt a large number of digital products by doing a bulk update

If you need to exempt a large number of digital products at the same time, you can do a bulk update. To do this procedure, you need to be comfortable editing.csvfiles.

Steps:

1. Exportthe products that need to be updated as a.csvfile, then edit the values in the following columns:
   
   

   Fields to edit in Product CSV

   CSV field	Setting
   Variant Requires Shipping	Set this value to false.
   Variant Taxable	Set this value to false.
   Variant Grams	Set this value to 0.

2. When you've finished editing your.csvfile,importit to your store. Be sure to check the optionReplace any current products that have the same handle.

Digital goods in the European Union

Digital goods in the EU are defined in legislation as broadcasting, telecommunications, and services that are electronically supplied instead of shipped. Gift cards sent online are not included in the definition.

You can read the rules for VAT ondigital services in the EU. Consult with a tax expert so that you know how the EU VAT rules apply to you.

VAT based on the customer location

If you're selling digital goods to customers in the EU, then you need to charge VAT based on your customers' location.

For example, if you're a Dutch merchant and you sell a digital product to a customer in Germany, then you have to charge the customer the German VAT rate of 19%. You canenable the EU Digital VAT Rates featureto make this process easier.

VAT registration

You can register for VAT in one of the following ways:

• 注册VAT in every EU country where you do business.
• 注册Mini One-Stop-Shop(MOSS) in an EU member country or region. Yourlocal tax authoritycan provide you with more details on how to register for MOSS.

Evidence of a buyer's location

If you sell digital goods, then some tax authorities require that you collect and record two pieces of evidence of a buyer's location. For every order, Shopify provides you with the billing address and the customer's IP address. The billing address appears on the order page. You can verify the IP address by clickingView Full Analysisin the Fraud Analysis section.

If an IP address appears to come from a different country than the billing address, then you should get another piece of evidence of their location. Check with a tax expert to make sure you have enough evidence for the tax authorities.

Enable VAT rates for digital goods

To simplify charging VAT on your digital goods, you can automatically assign VAT rates for each EU country.

If you enable VAT rates for digital goods, then a collection is created, and whenever you sell a product that is in the collection, the correct VAT rate is automatically applied based on the customer's billing address.

Enabling VAT rates creates amanual product collectionwith automatically-assigned VAT settings for each EU country. The default collection is calledDigital Goods VAT Tax, but you can change this to use any of your manual collections. For more information, refer toApply digital VAT rates to a different collection

Steps:

1. In theTax calculationssection, clickCharge VAT on digital goods.
2. ClickSave.
3. On yourCollectionspage, clickDigital Goods VAT Tax.
4. In theProductssection, search for products or clickBrowse, and then add your digital products to the collection.
5. After you add your digital products, clickSave.

Apply digital VAT rates to a different collection

After you create the initialDigital Goods VAT Taxcollection, you can apply the rates to another collection of digital goods.

Steps:

1. From your Shopify admin, clickSettings>Taxes and duties.
2. In theTax calculationssection, clickchange collection.
3. Search for the collection that you want to use, or choose the collection from the list.
4. ClickSave.

See the VAT rates you're using

If you've enabledDigital Goods VAT Rates, then you can see the VAT settings that are applied to each country in your shipping list.

Before you view your rates, make sure that each country is in yourShipping zone list.

Steps:

1. In theTax regionssection, clickSet uporEditbeside the name of a European country. The digital goods VAT is shown in theTax overridessection.

Disable the VAT rates for digital goods

If you disable the EU Digital VAT Rates feature and then re-enable it, you have to reassign yourpreferred collection如果你不使用默认的。

Steps:

1. In theTax calculationssection, uncheckCharge VAT on digital goods.