Shopify VAT exemption for B2B sellers
The most common complaint about Shopify wholesale apps is VAT: buyers charged VAT they should not pay, no way to validate a customer's VAT number, and exemptions gated behind top-tier plans. This guide explains how B2B VAT actually works for UK and EU sellers, how to set it up with Shopify's native B2B, and where validation fits.
First, the rule most guides skip: wholesale is not VAT-free
A UK business selling standard-rated goods to another UK business charges VAT at the normal rate. The buyer reclaims it through their own VAT return. The same is true domestically inside any EU member state. When a wholesale buyer asks for "VAT exemption", what they usually mean is one of the cross-border cases below, and getting those right depends on one thing: knowing the buyer's VAT number is real.
Which VAT treatment applies to which sale
- UK seller → UK business. Charge VAT normally. No exemption; the buyer reclaims.
- UK (GB) seller → EU business. Since Brexit this is an export of goods: zero-rated, provided you keep evidence the goods left the UK within the time limits inHMRC's VAT Notice 703. The buyer handles import VAT on their side.
- EU seller → business in another EU member state. The intra-EU reverse charge for goods: zero-rate the sale, show the buyer's validated VAT number and a reverse charge note on the invoice, and report it in your EC listing. The buyer accounts for VAT in their own country.
- Northern Ireland. Under the Windsor Framework, goods moving between NI and the EU still follow intra-EU rules; goods between GB and NI have their own regime. If you trade through NI, treat it as its own case.
- Services. Different place-of-supply rules apply and B2B services often fall outside the scope of the seller's VAT altogether. This guide is about goods; take advice for mixed supplies.
Every one of the zero-rating cases relies on the buyer being a genuine, currently registered business. Zero-rate a sale against an invalid VAT number and the liability for the missing VAT is yours, not the buyer's.
Validating VAT numbers: HMRC and VIES
UK numbers are checked against HMRC'sCheck a UK VAT number service; EU numbers against the European Commission'sVIESsystem, which queries the member state's own register. Two practices matter:
- Validate at onboarding, not after the first dispute. A wholesale account should never be approved with an unchecked number. Format-checking alone is not enough (you cantest formats with our free checker), because a well-formed number can still be deregistered or belong to someone else.
- Keep the evidence. Record when you checked, what the register returned, and for VIES the consultation number. HMRC and EU tax authorities both treat a logged validation as your good-faith defence if a number later turns out bad.
Setting it up in Shopify native B2B
Shopify's native B2B, available onevery plan since April 2026, stores tax settings where they belong: on the company location, not in the theme. The location holds the buyer's VAT registration and exemption status, and B2B checkout applies the right treatment automatically, in carts, checkout, and invoices alike. The legacy approach (apps that rewrite displayed prices to fake exemption) breaks exactly where it matters: at checkout and on the tax report.
What Shopify leaves to you is the process around that setting: collecting the VAT number when a buyer applies, validating it, deciding the treatment, and keeping the evidence.
How Transactful automates the process
Transactful's wholesale application form collects the buyer's VAT number andvalidates it live, against HMRC for UK numbers and VIES for EU numbers, before you approve the account. The validation result and timestamp are stored asevidence on the application, and approval writes the correct tax setting to the Shopify company location. Tax is right from the buyer's first order, on any plan, with nothing touching your theme.
Frequently asked questions
Do I charge VAT on wholesale orders to UK businesses?
Usually yes. A UK-to-UK B2B sale of standard-rated goods carries VAT at the normal rate; your business buyer reclaims it on their own VAT return. Wholesale does not mean VAT-free. Exemption and zero-rating apply in specific cross-border cases, not to domestic trade sales.
When does the reverse charge apply?
For goods, reverse charge applies to B2B sales between two different EU member states: the seller zero-rates the sale, records the buyer’s VIES-validated VAT number on the invoice, and the buyer accounts for VAT locally. A GB seller shipping to the EU is making an export instead, zero-rated with export evidence.
How do I validate a customer’s VAT number?
UK numbers against HMRC’s Check a VAT number service, EU numbers against the European Commission’s VIES system. Keep evidence of the check: the date, the result, and for VIES the consultation number, so you can show the number was valid when you relied on it.
Can Shopify handle B2B tax exemption without an app?
Native B2B stores tax settings and VAT registration per company location, and checkout applies them automatically. What Shopify does not do is validate the VAT number, collect it during onboarding, or keep the evidence. That is the part Transactful automates.
This guide is general information for UK and EU goods sellers, not tax advice. VAT treatment depends on your registrations and supply chain; confirm specifics with your accountant.