EU taxes (VAT) in Ecwid
If you’re a VAT-registered business based in the European Union, you’re most likely required to pay value-added tax (VAT). Ecwid allows you to set up your store according to the EU VAT rules. This includes charging VAT to your customers, applying a reverse charge when selling to another EU VAT registered business, and entering prices with VAT taxes included. You can also generate tax invoices and display your VAT ID number on the invoices.
To make your store automatically charge the proper VAT amount to your customers, enable automatic tax rates in your Ecwid admin, on the Settings → Taxes & Invoices page. See the instructions on how to set up automatic taxes →
Ecwid calculates the tax rates automatically based on the store and customer's location and includes VAT into product prices. At checkout, the customer will be charged a proper VAT rate according to the country and regional tax rules.
Ecwid stays up to date on the current VAT rates, so when the rates are changed, your store will automatically use the new rates with no actions required from your side.
Only the standard VAT rates are supported by the automatic calculation scheme at the moment. If you are required to charge a reduced rate or have zero-rated products in your store, we recommend disabling the automatic rates and setting up manual tax rates. See the instructions on how to set up manual taxes →
New rules on cross-border VAT for e-commerce (effective after July 1, 2021)
If you are selling goods and services online across the EU, then you are affected by the new rules that come into force on July 1, 2021. You are also affected by part of these rules if you are selling goods that are to be imported from outside the EU (no matter where your company is based). The new EU VAT rules aim at facilitating cross-border sales and taxation. By bringing simplicity and unification into this complex area, they are conceived to save time — so that you can devote it to your business.
The changes include:
- The new €10 000 threshold for cross-border sales within the EU. Before, there used to be different thresholds for different countries, now you have one common threshold. If you are based in the EU and your total distant sales are under €10 000 in each of the last two years, you can charge the VAT of your country on all sales across the EU. If your total distant sales are over €10 000, you need to charge the VAT of the country of your customer (there are different rates across the EU Member States).
- Registering with the new One Stop Shop (OSS). Before, you had to be VAT-registered in every EU country you sell to once you have reached a certain amount of sales — individual for every country. Now you need to register in one EU Member State only (e.g., your state). That will be enough to declare and pay VAT for all your cross-border sales. First, it hugely decreases the amount of work & effort. Second, you can now operate in your native language. Check out the online OSS portal for your country.
Registration for One Stop Shop (OSS) is open from April 1, 2021, but you can start using the system for your sales only after July 1.
Here’s what you need to do to prepare your Ecwid store for the forthcoming changes:
- In case your total yearly distant sales across the EU are over €10 000, then you need to either turn on automatic taxes so that the rates are calculated for your store automatically (that’s the recommended option), or you can set up manual taxes according to our instruction.
While setting up manual taxes, you will need to assign a corresponding VAT rate to each destination zone (EU Member State) that you sell to. You can simply create one tax, name it “VAT”, then create a separate zone for each of the EU states (Italy, Germany, and France in our example) and set tax rates for them in the Rates per zone section:
It is recommended to set tax rates for all the EU Member States, even if for now you don’t have customers from some of them.If you are currently using automatic tax rates, then you don’t need to change anything.
- In case your total yearly distant sales across the EU are under €10 000, then you can charge your domestic VAT rates when selling to other EU Member States. If your business is not VAT-exempt (applicable for SMEs), you need to make sure that the tax rate of your country is set up manually in your store for all the EU countries that you sell to.
If you already have your domestic rate set up in your Ecwid admin, then you don’t need to change anything.
In case you are not sure which rules apply to you, please, consult with a tax professional.
If you sell goods to another business and these goods are sent to another EU country, you do not charge VAT. If you sell within one country, you need to charge VAT. The VAT rules also require you to save a customer's VAT number and make sure it’s a valid EU VAT number.
To enable VAT reverse charge for B2B sales:
- From your Ecwid admin, go to Settings → Taxes & Invoices.
- Scroll down to Settings.
- Enable the Ask for buyers' VAT ID at checkout option.
It will add the VAT ID number field at checkout:
If a buyer located in another EU country enters VAT ID in the field, the VAT reverse charge will be applied. If a buyer is from your country, the VAT will be charged because such buyers should claim VAT return on their own.
VAT numbers provided by customers will also be saved in the order details for your future reference.
In Ecwid, there are two possible options you can choose from to enter your prices: with taxes included (gross prices) and without taxes included (net prices). If your store is inside the EU, gross prices are a preferable setting as they already include VAT.
For example, if you enter €275 as a price for your product in your Ecwid admin and use gross prices, the price your customers see on the product page in your store is also €275 (as taxes are included). If you enter €275 as a price for your product and use net prices, the price in your store can be €327,25 when the tax is added on top of the net price.
This is how the same price that you entered for a product in your Ecwid admin may look in the cart if your prices are net (left) and gross (right):
In case you were using net prices that do not include taxes and now want to switch to gross prices, you can do it in your Ecwid admin.
To choose gross prices:
- From your Ecwid admin, go to Settings → Taxes & Invoices.
- Click Change Pricing Settings:
- Choose I enter prices with taxes (Gross prices).
- Click Save.
That’s it! Now taxable customers will see all product prices and fees, such as shipping, in your store with taxes included.
You can generate tax invoices for your orders. These tax invoices are legally compliant and meet the standard invoicing requirements for the EU. There are two types of tax invoices available in your Ecwid admin: regular invoices for your sales and cancellation invoices for your refunds.
To preview an invoice that can be generated in your store, go to Settings → Taxes & Invoices → Tax invoices → Contents of tax invoice (the preview is available once the invoices are enabled for your store).
You can always create a tax invoice for an order in your Ecwid admin, on the page of the order in My Sales → Orders:
All the invoices that have been created for a particular order are available in the Tax invoices section on the page of this order. If needed, you can also download all the invoices for a certain time period in bulk.
If you have some specific requirements for invoicing or if you are making invoices via a third-party system outside of Ecwid, you can turn off Ecwid’s tax invoices in Settings → Taxes & Invoices.
Show your VAT ID on the tax invoice
If you are using Ecwid’s tax invoices, you can add your tax registration number to the invoice. See the instructions on adding your tax registration number to the invoice→
You can also specify the taxpayer identification number on your regular invoices (receipts).
Show buyer's VAT ID in admin email notifications
If the option Ask for buyers' VAT ID at checkout is enabled on the Settings → Taxes & Invoices page in your Ecwid admin, and order details have the customer's VAT ID number, the VAT ID will be shown in the admin email notifications of the order automatically.