Shopify VAT exempt B2B customers: how to set it up properly
Last updated 3 September 2026
A business customer emails asking to be invoiced without VAT. In Shopify that is a checkbox, and it takes about thirty seconds. The part that takes longer — and the part that gets invoices bounced back — is everything the checkbox does not do: prove the buyer qualifies, and say so on the invoice. This guide covers both halves.
The setting itself
Shopify gives you three different ways to stop charging tax, and which one you should use depends on your plan and on how often this happens.
| Method | Where | Use it when |
|---|---|---|
| Customer tax exemption | Customers → the customer → tax settings → turn off collecting tax | The standard route on every plan. Applies to that customer's orders when they are logged in. |
| B2B company location exemption | Shopify Plus → B2B → the company → location → tax settings | Several buyers order under one company. The exemption belongs to the company, not to whoever happens to be logged in. |
| Tax override | Settings → Taxes and duties → the country → overrides | A whole product or collection is taxed differently — not a customer-level exemption. Reach for this last. |
Turning the tax off is the easy half
The exemption switch does exactly one thing: it stops Shopify calculating tax on that order. It does not ask why. It does not know whether your buyer is in Munich or Milan, whether their VAT number is real, or whether the goods ever crossed a border. It will zero-rate a domestic sale as cheerfully as a cross-border one — and a domestic B2B sale still carries your normal VAT rate.
That matters because zero-rating you were not entitled to is not the buyer's problem. If the exemption does not hold up, the tax authority looks to you for the VAT you did not charge.
What has to be true before you switch it off
- The buyer is a taxable business, not a consumer who typed a company name at checkout.
- They are established in another EU member state. Same country as you means normal domestic VAT.
- They hold a valid VAT number there, and you checked it against VIES rather than taking their word for it.
- For goods, the goods actually left your country and you can show the transport evidence.
- You keep the proof. A screenshot is not a system. The check needs to be recorded against the order.
The legal detail behind those conditions — and why goods and services cite different articles — is covered in Shopify reverse charge VAT. The validation step has its own guide: VIES VAT validation for Shopify.
Collecting the VAT number without making a mess of it
On the standard plans there is no built-in VAT number field, so most stores improvise: a checkout note, a custom field on the customer record, or an email after the fact. All three produce the same result — an unvalidated string that may or may not include the country prefix, sitting somewhere the invoice never reads from.
Shopify B2B on Plus is better: a tax registration lives on the company, so it is captured once and reused. It still is not validated against VIES, and it still does not reach the invoice as a structured field.
The invoice is where exemptions are actually judged
An exempt B2B invoice is not a normal invoice with the tax line set to zero. Under the VAT Directive it has to carry extra information, and a buyer's accounts payable system — increasingly an automated one — will reject it if that information is missing.
| Required on an exempt B2B invoice | Does Shopify produce it? |
|---|---|
| Your VAT number and the buyer's VAT number | Only if you put it there yourself |
| The reason for 0% — "Reverse charge", or a reference to the exemption | No |
| The correct article for goods versus services | No — Shopify has no view on this |
| Net, tax and gross that reconcile to the cent | Fragile with tax-inclusive pricing |
| A structured EN 16931 file, not just a PDF | No |
From January 2027 that last row stops being a nice-to-have for anyone invoicing German businesses — see Germany's 2027 mandate. A PDF with "VAT exempt" typed in the notes field will not be an invoice in the legal sense.
The mistakes that cost real money
- Exempting a domestic business customer. The single most expensive one. B2B does not zero-rate a sale inside your own country.
- Trusting the VAT number. Buyers mistype them, and deregistered numbers look identical to valid ones until you check.
- Exempting the person instead of the company. A second buyer at the same client places an order and pays VAT they should not have.
- Leaving the exemption on forever. Companies deregister. Validate at invoice time, not once at onboarding.
- Zero with no explanation. The invoice is arithmetically fine and legally incomplete.
- Guest checkout. The exemption silently does not apply, and nobody notices until the customer complains.
Go deeper
- Shopify reverse charge VAT — when zero-rating actually applies, and the wording the invoice needs.
- VIES VAT validation — check an EU buyer's VAT number, and prove you did.
- EU B2B e-invoicing on Shopify — the hub guide: mandates, formats and deadlines.
- EN 16931 explained — the standard whose validation rules reject an unexplained 0% line.
Frequently asked questions
How do I make a customer VAT exempt in Shopify?
Open the customer in your admin, edit their tax settings and turn off collecting tax. Orders they place while logged in are then untaxed. On Plus with B2B, set the exemption on the company location instead — it survives multiple buyers under one company.
Does Shopify validate an EU VAT number for me?
Not on the standard plans. A number typed into a checkout field is free text: unchecked against VIES, often missing the country prefix, and with no record that a check happened. B2B on Plus stores a tax registration on the company, but validation and evidence are still yours to arrange.
Is a VAT-exempt customer the same as reverse charge?
No. Shopify's exemption is a switch that stops tax being calculated. Reverse charge and intra-Community supply are legal treatments with conditions attached. The switch tests none of them, so it will zero-rate a sale that should have carried domestic VAT.
Why is my exempt B2B invoice still being rejected?
Usually a 0% line with nothing explaining it. An exempt invoice must state the reason — "Reverse charge" for services where the customer is liable, or a reference to the exemption for intra-Community goods — and carry both VAT numbers. Shopify's setting writes none of that.
Can I zero-rate a business customer in my own country?
No. A business established in your own country is a normal domestic sale at your domestic rate. Marking them exempt is a common mistake, and the uncollected VAT is yours to pay.
Do I need Shopify Plus to sell B2B?
No. Per-customer exemptions work on every plan and are fine for occasional business orders. Company profiles, catalogs and payment terms are Plus features. Neither tier produces a structured EN 16931 invoice with the required wording.
This guide is general information for Shopify merchants, not legal or tax advice. VAT rules, national implementations and evidence requirements vary and change, and edge cases exist — confirm your own obligations with a qualified tax adviser.
E-invoices from your Shopify B2B orders
Zeppol turns every B2B order into an EN 16931 document, checks it against the EU and the German rules, and sends it over Peppol or by email. Join the list and I'll be in touch before the deadline.