Value Added Tax (VAT) | Adobe Commerce 2.3 User Guide (Archived)

Value Added Tax (VAT)

This site contains archived merchant documentation for a version of Adobe Commerce and Magento Open Source that has reached end-of-support. The documentation available here is intended for historical reference only and is not maintained. The Adobe Commerce Merchant Documentation for current releases is published on the Adobe Experience League.

Some countries charge a value-added tax, or VAT, on goods and services. There can be different VAT rates depending on which stage you as a merchant are at in the manufacture or distribution of the products, materials, or services that you sell to your customers. In some cases, you might need to use more than one VAT rate in your store for tax calculation purposes.

Magento can be configured to charge a value-added tax if both the merchant and customer are located in the same EU country. No VAT is charged if the merchant and customer are located in different EU countries.

However, for the sale of downloadable products, or digital goods, the VAT rate is based on the shipping destination, rather than the merchant location. See EU Place of Supply for Digital Goods.

Magento uses the following VAT fields and configuration settings to address different scenarios:

Merchant Information

Stores > Configuration > General > General > Store Information

VAT Number	The value-added tax number that is assigned to the merchant.
Validate VAT Number	VAT validation confirms that the VAT Number matches the corresponding record in the European Commission database.

Customer Information

Customers > All Customers > Edit

Account Information

Tax/VAT Number

If applicable, the tax number or value-added tax number that is assigned to the customer.

Addresses

VAT Number

If applicable, the value-added tax number that is associated with a specific billing or shipping address of the customer. For the sale of digital goods within the EU, the amount of the VAT is based on shipping destination.

Configure > Customers > Customer Configuration > Create New Account Options

Show VAT Number on Storefront	Determines if the customer VAT Number field is included in the Address Book that is available in the customer account.
Default Value for Disable Automatic Group Changes Based on VAT ID	VAT ID is an internal identifier for the VAT Number of the customer when used in VAT Validation. During VAT Validation, Magento confirms that the number matches the European Commission database. Customers can be automatically assigned to one of the four default customer groups based on the validation results.