Shifting of VAT refers to the change in responsibility to pay VAT to a tax authority. This change is the shift to the consumer, requiring you to not collect VAT on the order. We have implemented features in eCom that correspond to EU taxes requirements regarding the shifting of VAT.
VAT shifting is always based on the shipping address, not the billing address of the invoice. There are three scenarios where the VAT is automatically shifted to 0%:
- A company inside or outside the EU with a valid VAT number.
- A consumer outside the EU (including Norway and Switzerland).
- A consumer from the United Kingdom (UK) who's order value is greater than a certain amount.
- You can use the Tax ID field in checkout to collect tax IDs or EORI numbers (for the UK) from businesses.