What formula should I use to calculate VAT?

Note

This content is for informational purposes only and does not constitute legal advice. We recommend that you consult a qualified legal professional for any legal advice or questions you may have.

If you’re selling to customers in the EU, you may need to collect VAT (Value Added Tax) on those orders, regardless of where the order is fulfilled. This applies even if the order is fulfilled outside the EU.

Here’s a basic formula you can use to calculate how much VAT to charge:

(Retail price + shipping + services – discounts) × VAT rate

Services can include embroidery file digitization or other fees.
The VAT rate depends on both your business’s country of registration and where the order is delivered. You can find country-specific VAT rates using this VAT rate table or a VAT calculator.

EU VAT schemes to know about

If you sell across multiple EU countries, you might want to look into the One Stop Shop (OSS) scheme. OSS helps you report and pay VAT for all your EU sales in one place, instead of registering for VAT in each country you sell to.

If you’re selling low-value goods (under EUR 150) from outside the EU to customers in the EU, the Import One Stop Shop (IOSS) might apply instead. This system simplifies VAT collection and speeds up customs clearance.

Note

These schemes are optional but can make managing VAT easier if you’re selling to multiple EU countries.

We recommend checking with a tax professional to make sure you’re meeting all your VAT obligations. Every business is different, and a tax expert can give you advice based on your specific situation.