Shopify Tax Settings in Germany: Small Business Rule, VAT & OSS

The tax question is the most frequently asked one under Shopify tutorials, and almost every video skips it. Here you'll learn how to configure your Shopify tax settings to match your situation in Germany: small business, standard VAT or selling to other EU countries. The framework for this is in our overview Law and taxes for Shopify stores.

What Shopify does and doesn't do

Shopify calculates the tax based on your settings and shows it in the checkout and in the order. Paying, filing and declaring it is up to you. Shopify says so explicitly in its help on EU taxes. The idea that "Shopify pays the taxes for me" is therefore a misunderstanding.

Important for new stores: stores opened on or after 05/13/2026 only have the choice between Shopify Tax and manually maintained tax rates in the EU. The older "Basic Tax" no longer exists for them. Shopify Tax is free for these stores until you reach €100,000 in total sales. After that, according to Shopify, it costs 0.25% of transactions with calculated tax on the Basic, Grow and Advanced plans, up to a maximum of €0.99 per order. Factor this into your price calculation.

Tax ID, tax number, VAT ID: which number is for what?

Three numbers are constantly mixed up in the comments. Here's how to tell them apart:

When you set up taxes, Shopify asks for your VAT ID, which is why there's a field for 9 digits after "DE". Your 11-digit tax ID doesn't belong there. You can still sell without a VAT ID, and as a small business you don't need a registration in Shopify anyway.

Small business rule or standard VAT?

Before you configure anything, you need to know which option applies to you. You stated this in the tax registration questionnaire that you submit to the tax office after your trade registration (Gewerbeanmeldung).

Since 2025, the following applies to the small business rule under § 19 UStG:

• Your revenue in the previous year was no more than €25,000 (net).
• Your revenue in the current year stays at no more than €100,000. This is a hard limit: the very sale with which you exceed it is already taxable.
• In the year you start, the €25,000 limit applies. Revenue above it is taxed normally (IHK Heilbronn-Franken (German)).

§ 19 UStG only applies to businesses based in Germany. Austria has its own small business rule with a limit of €55,000 (USP (German)).

You can opt out of the small business rule. You're then bound by that choice for at least five years. Which option works out better is shown in this example with a selling price of €29.90 to consumers:

For stores that sell to consumers and have little input VAT, the small business rule is usually cheaper at the start. If you sell to businesses or buy a lot with VAT, standard VAT can be better. This is a good point for a one-time conversation with a tax advisor.

Setting up Shopify as a small business

As a small business, you may not charge or show VAT. In Shopify, that means:

1. Don't create a registration. Open "Settings > Taxes and duties". Under "European Union", don't add a VAT registration. Shopify only collects VAT in countries for which you've created a registration.
2. Be careful with Shopify's term "Kleinunternehmerregelung". In the German admin, Shopify uses this term for the EU rule for merchants who sell less than €10,000 to other EU countries and therefore charge their home country's tax rate everywhere. So this option collects German VAT. It has nothing to do with the German § 19 UStG.
3. Check your products. If tax still shows up somewhere, deactivate the option "Charge tax on this product" in the "Price" section of the product.
4. Remove "incl. VAT". Many themes show "incl. VAT" (inkl. MwSt.) or "Tax included" below the price. For a small business, that's wrong. You change the text under "Online Store", the menu next to the theme, "Edit default theme content". Replace it, for example, with "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet." (No VAT is charged in accordance with § 19 UStG.)
5. Adjust your invoices. Under § 34a UStDV (German), your invoices need a note that the small business exemption applies, plus your tax number or VAT ID. By default, Shopify sends an order confirmation, but not an invoice that meets German requirements. So you need an invoicing app or accounting software such as Lexware Office (formerly lexoffice) or sevdesk. Which mandatory details belong on the invoice and how to organize invoice numbers and accounting is covered in Invoices and accounting in your Shopify store.

Shopify tax settings with VAT

If you're subject to standard VAT, you set up Germany as a tax registration. Shopify asks for your VAT ID for this. You get it through the tax registration questionnaire or later from the Federal Central Tax Office (German).

1. Go to "Settings > Taxes and duties".
2. Under "Regional settings", click "European Union".
3. In the section "Collect VAT in an EU country", click "Collect VAT".
4. Choose Germany, enter your VAT ID and confirm with "Collect VAT".

The steps follow Shopify's guide to EU tax setup.

Display prices including tax

Consumers in Germany must see final prices. So under "Taxes and duties", activate the setting to include sales tax in the product price and shipping rate, and enter your product prices gross. You also define per market whether prices include taxes ("Prices include taxes"). A common mistake from the comments: the store says "incl. VAT", but the tax is added again in the checkout. In that case, this setting isn't active.

7% and 19% in the same store

If you sell books, food or other goods at the reduced rate, you need a product override. In Shopify, it works through collections:

1. Under "Products > Collections", create a manual collection, for example "Tax rate 7%", and add the relevant products.
2. Under "Settings > Taxes and duties", open Germany.
3. Under "Product overrides", click "Add override", choose the collection and enter 7%.

You decide which rate applies to a product, not Shopify. If in doubt, ask a tax advisor.

Selling to other EU countries: threshold and OSS

If you sell to consumers in Austria, France or other EU countries, an EU-wide threshold of €10,000 per calendar year applies. It's calculated across all EU countries combined (BZSt (German)).

• Below €10,000: You charge German VAT, even for the customer in Vienna.
• Above €10,000: You charge the destination country's tax rate, e.g. 20% for Austria. So that you don't have to register in every country, you report these sales via the One-Stop Shop procedure (OSS) with the BZSt.

In Shopify, you choose the option "Collect through a One-Stop Shop (OSS) registration" under "Cross-border VAT collection" in the "European Union" section. If you stay below the threshold, choose "Collect through your home country registration".

As a German small business, as long as you stay below the €10,000 threshold, you also don't charge VAT to customers in other EU countries. If the threshold is exceeded, the VAT law of the destination country applies, and § 19 UStG doesn't help you there. At that point at the latest, the topic belongs with a tax advisor. So for sales to Austria below the threshold, you don't need a separate Austrian registration. If you only want to sell in Germany, the easiest way to restrict this is through markets and shipping zones. How that works is explained in Setting up shipping in Shopify, and multiple countries and currencies are covered in Setting up Shopify Markets.

Goods from China or other non-EU countries

If your goods ship directly from a non-EU country to customers in the EU, things get more complicated tax-wise: then it's about import VAT, IOSS and, since July 2026, a flat customs charge for low-value consignments. There's no longer a goods value below which nothing is due: import VAT has applied from the first euro since 2021, and since 07/01/2026 there's no customs exemption for consignments under €150 either. For IOSS-registered sellers, a flat charge of €3 per item line applies (IHK Magdeburg (German)). Shopify points out that collecting VAT on orders shipped from non-EU countries to EU customers isn't supported for merchants based in the EU. Have this model checked for tax purposes before you start. Why EU suppliers are often the better choice is explained in Finding reliable dropshipping suppliers.

Switzerland, the US and digital products

Countries outside the EU: Deliveries to customers in Switzerland, the UK or the US are generally VAT-exempt in Germany as exports, provided you can prove the export. However, import tax and customs may be due in the destination country. Without arrangements, your customer pays this on delivery, which often leads to refused deliveries. At the start, it usually makes more sense to focus on Germany and the EU.

Digital products: PDFs, templates or courses are generally subject to 19% in Germany. E-books and comparable electronic publications have been reduced to 7% since December 2019 (§ 12(2) No. 14 UStG). For individual templates or patterns, however, that's not automatically the case. If you sell digital products to consumers in other EU countries, they count toward the same €10,000 threshold. More on this in Selling digital products with Shopify.

After the sale: VAT returns, income tax, trade tax

Many comments mix up three taxes. Here's how they differ:

An example from the comments: you sell a phone case for €12.99 and keep €5.81 after purchasing costs and fees. VAT (with standard VAT) is calculated from the selling price: €12.99 contains €2.07 VAT. You pay income tax later only on the profit left after all costs. That's why VAT belongs in the calculation of every price.

If you only had expenses in your first year, for example for Shopify, samples and ads, filing a tax return is still worthwhile: the loss can be offset against later profits. Collect all receipts from the start for this.

FAQ

Do I have to activate "Collect tax" in Shopify, or will I get into trouble with the tax office?

Only if you're subject to standard VAT. Then you have to charge VAT, and for that you create your German registration in Shopify. As a small business under § 19 UStG, however, you may not show VAT. So what matters is what you stated in the tax registration questionnaire, not a checkbox in Shopify.

Do I need a VAT ID to sell with Shopify?

Not necessarily for selling to consumers in Germany. However, merchants subject to standard VAT need it to collect VAT in Shopify and for OSS. Small businesses can also make good use of a VAT ID, for example so that advertising platforms from other EU countries invoice correctly without foreign tax. You can apply for it via the questionnaire or with the BZSt.

Does Shopify pay the VAT to the tax office for me?

No. Shopify calculates the tax and shows it in orders and reports. You have to pay it yourself, via the advance VAT return in ELSTER or through your tax advisor. With OSS, you report sales to other EU countries quarterly to the Federal Central Tax Office.

Where do I get my tax number?

Your tax office assigns the tax number after you've submitted the tax registration questionnaire via ELSTER following your trade registration. It's not the same as your personal tax identification number, which you've had since birth. For invoices and payment providers, you need the tax number or the VAT ID.

What happens if I exceed €25,000 as a small business?

If you exceed €25,000 in one year, you're subject to standard VAT the following year. If you exceed €100,000 in the current year, the exemption ends immediately with the sale that crosses the limit. Then you have to switch Shopify over, recalculate prices and issue invoices showing VAT. So monitor your revenue monthly.

Do I need a tax advisor for my Shopify store?

It's not mandatory. As a small business with manageable revenue, many people handle their accounting themselves with software. At the latest with standard VAT, sales to other EU countries, goods from non-EU countries or rising profits, a tax advisor usually saves more trouble than they cost. A one-time startup consultation is almost always worthwhile.

Is VAT added to the Shopify subscription?

That depends on your VAT ID. Shopify bills merchants in the EU through a company in Ireland. If you add a valid VAT ID to your billing profile, the fees usually come without VAT, and you pay it yourself under § 13b UStG. Without a VAT ID, Shopify treats you like a consumer and adds VAT. As a small business, you can't reclaim it as input VAT in either case.

Does my salary count toward the small business limit?

No. For the limits of €25,000 and €100,000, only the revenue from your business activity counts, i.e. from your store and other sales. Your wages from an employee job aren't revenue. They only matter for income tax, because that's where your salary and your store profit are added together.

As of: October 2026. Menu paths according to the Shopify Help Center, as of October 2026; Shopify occasionally changes labels. This article is not legal or tax advice.