When wholesale customers should not be charged VAT
Business buyers often shouldn't pay VAT or sales tax on what they buy from you. The two most common cases in wholesale are:
- EU reverse charge. When a VAT-registered business in one EU country buys from a supplier in another, the supplier usually doesn't charge VAT. The buyer accounts for it in their own country instead. This depends on the buyer having a valid VAT number.
- Resale exemptions. Some buyers are exempt because they resell the goods, for example under a reseller certificate. Rules vary by country and state.
In both cases, you need to know the buyer's tax ID is real before removing tax, and you need a record on the order showing why tax wasn't charged.
Tax rules depend on your country, your buyers and what you sell. Check with your accountant before relying on reverse charge or resale exemptions. This guide explains the tools, not your tax obligations.
Your options on Shopify
Shopify has two built-in tools:
- Customer tax settings. On a customer profile, you can set tax collection and choose exemptions, or stop collecting tax for that customer. See managing customers.
- VAT validation at checkout. For stores using Shopify Tax in the EU or UK, you can show a Company VAT number field at checkout. Shopify validates it and applies the reverse charge on eligible cross-border orders. If VIES can't complete the check, VAT is charged. See VAT validation.
Nexora B2B Wholesale Pricing adds a rule-based approach for tagged wholesale customers. Buyers give their VAT number when they apply (on your registration form), the app validates it against VIES, and the exemption is applied to the customer in Shopify before their first order. Each qualifying order can be tagged and noted for your records. It's free.
How to set up tax exemption with Nexora B2B Wholesale Pricing
- Collect the VAT number
In Registration → Registration forms, add a Tax ID element and a Country element to your wholesale application form. See the registration form guide.
- Create a tax exempt rule
Go to Add-ons → Tax exempt and click Create tax exempt rule. Give it a Name.
- Choose the exemption mode
In Exemption mode, pick Reverse charge — EU cross-border only (the usual choice for EU B2B) or Exempt all tax — resale.
- Set validation
In Validation, keep Require a valid Tax ID on and choose which EU countries are eligible. All EU countries are selected by default.
- Tag orders and set the discount layer
In Order tagging, set the Order tag (for example
tax-exempt) and choose whether to Add the validated Tax ID to the order note. If your prices include VAT, review Tax-inclusive discount. - Choose customers and activate
Choose which customers the rule covers, for example customers tagged
wholesale-eu. Activate the rule and save.
Settings explained
| Setting | What it does |
|---|---|
| Reverse charge — EU cross-border only | VAT is removed only once the buyer's Tax ID is validated and the order crosses a border. Domestic orders are taxed as normal. |
| Exempt all tax — resale | VAT is removed on every matching order, whatever the country, once the buyer's Tax ID is validated. Use it for verified resellers. It carries more compliance responsibility on your side. |
| Validation | EU VAT numbers are checked against the EU VIES registry. |
| Require a valid Tax ID | When on, the exemption applies only after a successful check. When off, customers can be exempted before validation. |
| EU countries | Limit which countries' VAT numbers are eligible. |
| Order tag | Added to every order that qualifies, so you can filter exempt orders in Shopify. |
| Add the validated Tax ID to the order note | Keeps the VAT number on the order for your records. |
| Tax-inclusive discount | For stores whose prices include VAT. Exempt buyers see the VAT removed as a discount line instead of a price change, so displayed prices stay consistent. It has no effect on tax-exclusive stores. |
Managing exemption for one customer
When you approve a registration that includes a VAT number and country, the app checks the number and applies the exemption only if it is valid. If the check can't confirm the number, the customer is still approved but not exempted, and you can review them by hand.
On a customer's page, the Tax exemption card lets you enter a Tax ID (VAT number) and Country, choose an Exemption mode, then Validate the number, Apply exemption or Revoke exemption.
| Mode on the customer card | Use it when |
|---|---|
| Reverse charge (EU cross-border) | An EU business buyer with a VAT number you want validated. |
| Exempt all tax (resale) | A verified reseller who is exempt on every order. |
| Exempt without Tax ID (supplier-exempted) | You've verified the exemption another way, for example with a certificate. No VIES check is made. |
Example setup: a Dutch supplier selling across the EU
A cosmetics supplier ships from the Netherlands to salons across the EU. Store prices include Dutch VAT for consumers. EU salons are tagged salon-eu when approved.
| Setting | Value |
|---|---|
| Exemption mode | Reverse charge — EU cross-border only |
| Require a valid Tax ID | On |
| EU countries | All |
| Order tag | reverse-charge |
| Add the validated Tax ID to the order note | On |
| Tax-inclusive discount | On |
| Customers | Tag salon-eu |
A salon in Belgium applies with its Belgian VAT number. On approval, the number is checked against VIES and the exemption is applied. Their orders ship from the Netherlands to Belgium, so VAT is removed and shown as a discount line, the order is tagged reverse-charge and the VAT number goes into the order note. A Dutch salon with the same tag still pays Dutch VAT, because the order doesn't cross a border.
Tips and common mistakes
- Always collect the country with the VAT number. Add the Country element next to Tax ID on the form.
- Prefer reverse charge over blanket exemption unless you have a clear reason. It keeps domestic orders taxed.
- Use the order tag in your bookkeeping. Filter orders by the tag at month end to list zero-rated sales.
- Re-check when details change. If a buyer's VAT number changes, Revoke exemption, update it and validate again.
- Show buyers the right price before checkout. Pair this with a tax display rule so business buyers see prices excluding VAT on the storefront.
The app validates EU VAT numbers through VIES. If you need to verify other kinds of tax IDs, check them yourself and use Exempt without Tax ID (supplier-exempted).
Frequently asked questions
How are VAT numbers validated?
EU VAT numbers are checked against the EU VIES registry before the exemption applies, when Require a valid Tax ID is on.
Will domestic business customers be exempted too?
Not with Reverse charge — EU cross-border only. VAT is removed only when the order crosses a border. Exempt all tax — resale removes it on every matching order.
Can I exempt a customer without a VAT number?
Yes. On the customer's Tax exemption card, choose Exempt without Tax ID (supplier-exempted). No VIES check is made, so keep your own evidence.
My prices include VAT. Will exempt buyers see the right total?
Turn on Tax-inclusive discount. Exempt buyers see the VAT removed as a discount line, so your displayed prices stay consistent.
How can I find exempt orders later?
Every qualifying order gets the Order tag you set, and optionally the validated Tax ID in the order note.
Does the app validate UK VAT numbers?
Not automatically. VAT validation uses the EU VIES registry, so UK (GB) numbers go to Pending for you to review by hand. You can still exempt a UK buyer from the customer page with Exempt without Tax ID (supplier-exempted) once you have checked their number.
