Set up German taxes in your Shopify store

Correct VAT calculation on a German Shopify store depends primarily on your VAT-registered status.

Germany applies two main VAT rates, but the applicable rate and registration requirements change once you sell to customers in other EU countries, depending on your turnover and the type of customer you're selling to.

If you're VAT-registered and sell to both consumers (B2C) and business customers (B2B) across different EU countries, you'll need to configure your tax settings and tax rates correctly to charge the right VAT to every customer.

Sufio, an invoicing app for Shopify stores, uses your tax settings to generate accurate, compliant invoices for every order, so getting these settings right from the start makes bookkeeping much easier down the line.

This article walks you through setting up taxes for a Shopify store based in Germany.

Last updated on October 21, 2026.

In this article, we will discuss:

• Tax settings
  • Display product prices including VAT
  • Display product prices excluding VAT
• Tax rates in Germany and the EU
  • Selling physical goods to customers in Germany
  • Selling physical goods to customers in other EU countries
    • Selling within the micro-business threshold
    • Surpassing the micro-business threshold
    • Selling with a country-specific registration
  • Selling digital goods
    • The VAT rules when selling digital services
• Invoices

As a Germany-based store, you can choose how VAT is displayed in your product prices, depending on whether you sell to consumers or to businesses. Shopify offers two options for this.

If you sell to consumers (B2C), display product prices with VAT included. German price display rules (Preisangabenverordnung) require prices shown to consumers to include VAT.

To display your product prices with VAT included:

1. In your Shopify admin, go to Settings → Taxes and duties.
2. In the Additional configuration section, turn on Include sales tax in product price and shipping rate.
3. Click Save to apply the changes.

You can also enable dynamic tax inclusion, a Shopify feature that automatically includes or excludes VAT based on the customer's region and adjusts the tax rate accordingly, so you don't need to manage this manually for every market.

Tax display is set for each market. To activate dynamic tax inclusion:

1. In your Shopify admin, go to Markets and click the market you want to configure.
2. In the Inherited section, click the + icon next to Taxes and duties.
3. Under Tax display, select Dynamic tax display, then click Done.
4. Click Save to apply the changes.

If most of your customers are businesses (B2B), displaying prices excluding VAT is the more common approach, since B2B buyers typically expect to see net prices before tax.

To display your product prices excluding VAT:

1. In your Shopify admin, go to Settings → Taxes and duties.
2. In the Additional configuration section, turn off Include sales tax in product price and shipping rate.
3. Click Save to apply the changes.

To disable dynamic tax inclusion:

1. In your Shopify admin, go to Markets and click the market you want to configure.
2. In the Inherited section, click the + icon next to Taxes and duties.
3. Under Tax display, select Show as line item, then click Done.
4. Click Save to apply the changes.

As of 2026, the standard VAT rate (MwSt, or Mehrwertsteuer) in Germany remains 19%.

The reduced rate of 7% applies to specific categories, such as most food products, books and e-books, newspapers, and local public transport, and, since January 1, 2026, to food served in restaurants and by caterers (excluding drinks).

For sales to consumers (B2C) in other EU countries, the VAT rate you charge on physical and digital goods depends on your cross-border sales.

If you charge VAT (and don't use the Kleinunternehmerregelung), you charge German VAT when selling physical goods to customers in Germany—whether they're VAT-registered or not.

When selling to non-VAT-registered customers outside Germany but still within the EU, VAT applies.

The rate depends on whether your sales exceed the micro-business threshold of €10,000 (excluding VAT).

If you're selling to VAT-registered businesses in other EU countries, you don't charge VAT, as long as your customer has a valid EU VAT number and the goods are shipped to another EU country. You must also report these sales in your EC Sales List (Zusammenfassende Meldung).

Shopify calculates the correct rate automatically based on the registration type set in your tax settings.

Selling within the micro-business threshold

If your cross-border B2C sales to other EU countries (distance sales of goods plus telecommunications, broadcasting, and electronic services) stay at or below €10,000 (excluding VAT) in both the current and the previous calendar year, you can charge German VAT on those sales.

This rule only applies if your business is established only in Germany and your goods are shipped from Germany.

No application or approval is needed—simply set up your tax settings in Shopify admin. This only needs to be done once.

To charge German VAT on eligible cross-border B2C sales:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Tax regions section, click European Union.
3. In the Collect VAT cross-border section, click Collect VAT.
4. In the Collect across the EU window, select Collect using your home country registration.
5. Select your Country of registration and enter your VAT number. Leave this field blank if you've applied for a VAT number but don't have one yet. You can update it later.
6. Click Collect VAT to save your changes.

Surpassing the micro-business threshold

Once your cross-border B2C sales exceed €10,000 (excluding VAT) in the current or the previous calendar year, you must charge the VAT rate of each customer's country.

In practice, this means customers in different EU countries will be charged different VAT rates, ranging from 17% to 27%.

For example, say your business is based in Germany and you sell to consumers in Belgium and France. As long as your combined cross-border B2C sales to all other EU countries stay at or below €10,000, you simply charge the German VAT rate of 19%.

Once that combined total crosses €10,000, you charge 21% Belgian VAT on goods sold to Belgium and 20% French VAT on goods sold to France.

Registering for VAT separately in every EU country you sell to can quickly become time-consuming.

The One Stop Shop (OSS) Union scheme solves this: you still charge VAT at the rate of the customer's country, but you only need to file one OSS VAT return in Germany covering your EU B2C sales.

To set VAT rates for the OSS scheme and charge your customers' shipping-country VAT rate on all orders:

1. In your Shopify admin, go to Settings → Taxes and duties.
2. In the Tax regions section, click European Union.
3. In the Collect VAT cross-border section, click Collect VAT.
4. In the Collect across the EU window, select Collect using a One Stop Shop (OSS) registration.
5. Select your Country of OSS registration and enter your VAT number. Leave this field blank if you've applied for a VAT number but don't have one yet; you can add it later.
6. Click Collect VAT to save your changes.

Now, your customers' shipping country VAT rates automatically apply to all EU sales.

Selling with a country-specific registration

You need a local VAT registration in another EU country if you make taxable sales there that OSS doesn't cover, for example, if you store stock in that country and ship to customers from there.

In that case, you can no longer use the €10,000 threshold.

If that's your situation, you can add a local VAT registration number for any additional country in Shopify, and the correct VAT rate will be applied automatically based on that registration.

To add a local VAT registration number:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Tax regions section, click European Union.
3. In the Collect VAT in an EU country section, click Collect VAT (or Collect in another location if you already have a registration).
4. Select the Registration country and enter your VAT number. Leave this field blank if you've applied for a VAT number but don't have one yet. You can update it later.
5. Click Collect VAT to save your changes.

If you can't select an additional country you're VAT-registered in, you may need to create a shipping zone first.

To create a shipping zone:

1. In your Shopify admin, go to the Settings → Shipping and delivery page.
2. In the Shipping profiles section, click the profile you want to add the zone to (for example, General profile).
3. In the Shipping zones section, click + Zone.
4. Name the zone, add the country (or countries) you're VAT-registered in using the search bar, and click Done.
5. Add shipping rates to make the zone available.
6. Click Save to apply the changes.

Special rules apply when selling digital goods from Germany to other EU countries.

Before applying these rules, it's important to understand exactly what qualifies as a digital service.

Digital goods or services include radio and television broadcasting services, telecommunication services, and electronically supplied services, such as online magazines, music, films, and games.

Using the internet to facilitate a sale doesn't automatically make it a digital service.

For example, when an order is placed and processed electronically through a Shopify store, but the product itself is a physical good, this remains a standard sale of goods and follows the standard VAT rules described above.

The VAT rules when selling digital services

If you supply digital services from Germany to other EU countries, those sales count toward the same €10,000 EU-wide threshold used for physical goods.

This is a combined threshold covering both intra-EU distance sales of goods and digital (TBE) services together.

While your total cross-border sales stay below €10,000, you can continue charging German VAT.

Once your combined goods-and-digital sales exceed that threshold, you must charge VAT at the rate of each customer's country for sales to non-VAT-registered customers (B2C), resulting in different VAT rates per country, ranging from 17% to 27%.

If you sell digital services to VAT-registered businesses (B2B), the responsibility for VAT shifts to them under the reverse charge mechanism.

Since the same €10,000 threshold and OSS registration already apply to your physical goods, you don't need a separate registration for digital services.

The Union OSS scheme now covers both goods and digital services under a single registration, letting you report VAT for all your qualifying EU sales through one portal in your home Member State.

Once your tax rates are set up correctly, Sufio automatically generates valid invoices with an accurate VAT breakdown for every order.

Invoices can be created in multiple languages and include all the necessary details to make them compliant with invoicing legislation in the EU.

Issuing invoices with the correct tax breakdown is crucial for your bookkeeping and tax purposes.

For B2B sales, Sufio invoices automatically include all required information, along with the VAT registration number (USt-IdNr., or Umsatzsteuer-Identifikationsnummer) of both your store and your business customers.