The VAT reduction - What to do before 01.07.2020 for Shopify stores.

The Corona crisis has left some marks, especially on the economy and the business cycle. To counteract this and relieve the trade, the federal government has developed an economic stimulus package, which plans a reduction in VAT. Accordingly, the value added tax is to be temporarily reduced from 19% to 16% from 01.07.2020. The reduced rate, which applies to essential goods, is also to fall from seven to five percent. This regulation is limited to six months.

This will result in considerable additional work for retailers, especially in the stationary trade. Cash register systems, accounting and price tags have to be adapted, updates and corresponding allocations are required. It is particularly difficult because after six months all changes have to be restored to the status quo.

Much criticism is levelled above all at the shortage of time - there are only a few weeks left until July 01 and accounting services and software manufacturers have to react quickly.

The VAT reduction at Shopify

Shopify has already responded. The good news in advance - for many Shopify stores there will be hardly any extra work, as the VAT will be automatically reduced from 19% to 16% by Shopify from July 01.

If you sell products that fall under a lower tax rate, this change must be adjusted independently in the Shopify backend. To do this, go to the settings. Under the Taxes item, you can edit the tax information for your tax region.

Tip: Do you already know the Tax Exempt Manager? It helps you to comply with EU tax regulations when selling internationally.

In addition, you can add tax overrides that apply to shipping or specific product categories.

Insofar as you display both gross and net prices to your customers in the online store, a redesign must be made here as well.