How to add a VAT number field to the WooCommerce checkout

January 17, 2023

How to add a VAT number field to the WooCommerce checkout

Learn how to easily add a VAT number field to the WooCommerce checkout page. This step-by-step guide will reveal the best WooCommerce EU VAT number plugins and how to use them.

Do you need to add a VAT number field to the WooCommerce checkout? The core WooCommerce plugin does a great job calculating sales tax for the US and most other countries. However, it doesn’t add a VAT field to the checkout.

While it’s not technically difficult to add a VAT number field to WooCommerce, few people can tell you why it’s important and what the implications for your business could be. The reasons to add a VAT field to the checkout will vary depending on your country and the type of business.

Maybe you need a simple VAT number field to check whether your buyers are businesses. Perhaps you need a WooCommerce EU VAT number plugin to issue VAT invoices to European customers or allow B2B customers to reverse charge their VAT.

Keep learning to discover the different reasons for adding a WooCommerce VAT number field to the checkout page. I'll also share some great plugins that make this easy, whether you want to:

  • Add a simple VAT number field to the WooCommerce checkout.
  • Easily disable VAT for all business (B2B) customers, while continuing to charge VAT to normal customers.
  • Ensure full EU VAT law compliance in your WooCommerce store.

Why should I add a VAT number to the WooCommerce checkout?

WooCommerce EU VAT number field on checkout

Domestic or international tax law might require you to add a VAT number for various reasons. This depends on the location of your business (for domestic VAT), or the location of your customers and nature of your products (for European VAT). It might also depend on your customers' situation, for example whether they are businesses making B2B purchases, or B2C end users.

We'll discuss both of these in turn.

Collecting VAT numbers for domestic tax purposes

If you sell physical products which are posted to customers, then there are several reasons why you might need to add a VAT number field to the WooCommerce checkout. For example:

  • To meet the tax laws of your own country.
  • As a way for B2B stores to check that their customers are genuine businesses. Wholesale store operators need to ensure that the customer is a registered business, whether or not they need to comply with EU VAT law.
  • And so on.

If you literally just need to add a basic VAT number field to the WooCommerce checkout, then that’s very simple. You simply install the best plugin for adding a VAT field to the checkout, the customer enters their VAT number. The VAT number then appears on the order details page in the WordPress admin and in the order notification email. I’ll show you how to do it later in the article.

Alternatively, you might want to disable tax for all your customers who are businesses, instead of worrying about VAT number fields. I'll show you how to do that too.

Unfortunately, things become more complex if you sell digital products to customers in the European Union. That’s when you need to add a more fully-featured WooCommerce EU VAT number field to the checkout page. Next, let’s think anout whether these additional requirements apply to your store.

EU VAT law and your WooCommerce store

However, the most common reason for needing a WooCommerce EU VAT plugin is to meet international law. Specifically, we’re talking about the European Union’s cross-border VAT legislation - also known as EU VAT law. This only applies to digital products such as selling software, online courses, digital images, and so on. If you only sell digital products then EU VAT law shouldn’t apply to you.

In a nutshell: If you sell digital products to customers in European countries, then you are probably required to comply with EU VAT law (even if you’re not based in the EU). That’s right - EU VAT laws stipulate that online stores selling digital products, no matter where they are based, must charge VAT at the rate of the country where the customer is.

Because of built-in WooCommerce restrictions, you can't fully comply with EU law using the standard tax settings. But before you add a WooCommerce EU VAT number field to your checkout, take a minute to fully understand the requirements.

Let’s go into a bit more detail.

What are the EU and UK VAT laws for eCommerce?

As we have seen, European Union Value-Added Tax (EU VAT, or IVA) is a tax on digital products that are sold to customers in the EU. The customer pays the VAT when they make the purchase. The seller is responsible for collecting the money and paying the VAT to the proper tax authority.

For example, imagine that you’re an e-commerce store and your base country is the US. When you sell downloadable software to a customer in Belgium, EU tax law requires you to charge Belgium VAT to that customer.

UK VAT is similar. The UK is not a member of the European Union any more due to Brexit. However, they have kept the EU VAT laws. As a result, for invoicing purposes, you should collect UK tax from customers in the UK.

If you don’t live in the EU, you may be surprised that EU countries expect you to collect sales taxes on their behalf. Why, for example, should a US seller have to ensure that the tax (VAT) generated when a German national buys something from a US web store actually reaches German authorities? That doesn’t seem fair on non-EU businesses, does it?!

Nevertheless, if you sell digital products to EU customers, you must generally apply EU VAT rules even if you're not EU-based. That’s the EU VAT law, which is about the customer’s country. Since your web store has a global reach, it affects you, too.

Some sellers outside the EU are sceptical about their obligation to comply. However, transgressions may be subject to fines, legal claims, blacklisting on marketplaces, and investigation by tax authorities. We highly recommend that you consult your tax advisor about your EU tax profile and err on the side of caution.

So, what exactly are my EU VAT obligations?

Depending on your revenue and whether you sell digital products, you must charge EU VAT on all sales to individual (non-business) consumers in EU countries. The customer pays the VAT when they buy your product. Since you are responsible for sending them the VAT, you need to keep that record of their location. That’s part of European Union VAT law.

Different countries in the EU have different VAT rates. Sellers of digital products must charge VAT at the consumers' local rate. For example, if you're outside France and sell a computer game to a consumer in France, you must charge the French VAT rate.

Since you’re collecting VAT on behalf of a foreign tax authority, you are obligated to pay that money to the correct tax authority. You must pay the VAT you collect from French customers to France. You must pay the VAT you collect from German customers to Germany, and so on.

Registering for European Union and UK VAT

To fulfill your obligation as a collector of VAT, you have to register as a VAT vendor in both the UK and the EU. Luckily, the EU has a centralized service called MOSS (the VAT Mini One Stop Shop) which lets you make a single tax return and quarterly payment, which is automatically distributed to all the EU countries. This means that you have to register for VAT in the European Union and also the UK - but not each individual EU country.

EU VAT number validation for B2B customers

As we have seen, you have to collect EU VAT from customers and then report and pay that VAT to the European tax authorities. However, this only applies to customers who are consumers - business customers are excluded.

As a result, if your EU customer is an EU-registered business with a valid VAT number, the business is entitled to claim, waive, or reverse charge their VAT expenses. So, for business-to-business (B2B) transactions, sellers are allowed to reverse charge VAT in their stores, but only if the EU business has a valid VAT number. If you’ve ever received a support request about VAT from a B2B customer, then you’ll know that VAT exemption is important to them!

There is a potential pitfall in this scenario. You, the seller, are responsible for performing validation to ensure the VAT number they supply is correct. You may not issue a zero-rated VAT invoice unless you have verified that the VAT number is valid and belongs to a duly registered business. Also, you must store this information for several years (5-10 years, depending on the type of transaction) for auditing purposes.

In practice, you may sometimes come across a small EU business without a VAT number. You must obtain proof that it is a business and not an individual (e.g. a website link and other commercial documents) and store this information for several years in case you get audited. That has to be a manual process, which isn’t ideal.

If all of this sounds like a nightmare, don’t worry! You can automate much of this by installing the right WordPress plugin to handle most of your EU VAT obligations. A big part of this is adding a WooCommerce EU VAT number field to the checkout, or finding another way to avoid charging them VAT.

Different reasons, different solutions

As we have seen, there are two main reasons to add a VAT number field to your store’s checkout page:

  • To accommodate domestic B2C customers and for record-keeping purposes.
  • To meet your EU and UK VAT requirements.

The best plugin for adding a VAT number field to the WooCommerce checkout depends on which of these categories your store falls into. I’ll reveal the best plugin for each category next.

Best plugin for adding a simple VAT number field to the WooCommerce checkout

Do you need to collect customers' VAT numbers without complying with EU VAT law? For example, maybe you're a B2B store and need to check that customers are registered businesses. Or maybe you sell physical products, or only sell to domestic customers with your own country.

There are lots of reasons for adding a VAT number field to the WooCommerce checkout without needing an EU VAT plugin. In this case, you need to collect the VAT number but you are not obligated to validate the VAT number via an external database.

In this case, we recommend the Checkout Field Editor WordPress plugin. It's a simple, quick option that will let you collect VAT numbers on your frontend checkout without adding any unnecessary complexity to the WordPress backend.

Simply install the plugin and go to the settings. Add a text field label to the checkout, label it something like “VAT Number”, add a placeholder, and that’s it! You can choose whether or not to set it as a required field.

However, while you’re there, it’s worth considering whether to add any additional fields to the checkout form. After all, this is a fully featured WooCommerce checkout field editor plugin! For example:

  • B2B stores can add extra fields such as company name, or a checkbox to show/hide the VAT.
  • You could add a checkbox to indicate whether the customer is a business or not.

When customers check out, they can enter their VAT number along with other information such as filling in the billing section (e.g. billing address).

Alternative option: Disable tax for all regular B2B customers

Before we move on to the best WooCommerce EU VAT plugin, I want to share another simple solution with you. This might be a good option if your B2B customers are regular buyers and already have accounts on your WordPress site.

It's a quick and easy workaround that lets you continue letting B2B customers order without paying VAT. This is much easier than reverse charging VAT on the WooCommerce checkout, or issuing manual VAT refunds later.

Let's say that you have a WooCommerce store and charge VAT on B2C sales to retail customers. However, you're not required to charge VAT on B2B (business-to-business) transactions.

One simple solution is to use the WooCommerce Wholesale Pro plugin to create a separate user role for B2B customers. The plugin has a setting to disable tax for each wholesale role. That way, you can continue charging VAT to other UK customers - while removing tax for B2B users.

Install WooCommerce Wholesale Pro today and let B2B users place orders without paying tax.

How to remove VAT for B2B users

  1. Install WooCommerce Wholesale Pro on your WordPress website.
  2. Go to WooCommerce → Settings → Wholesale. If you want to disable tax for all your B2B users then tick the 'Disable tax' field, then skip ahead to step 4.
  3. If you want to disable tax for some B2B customers but not others, then go to the 'Wholesale Roles' page and create two roles: one for B2B users who do pay tax, and another for those who won't. On the 'Create Role' page, set the 'Tax Status' to 'Disabled'.
  4. Now go to Users → Add New and create an account for each of your B2B customers. Or if they already have an account, change their user role to the new wholesale role where tax is disabled.
  5. When the B2B customer logs in, they will see prices without VAT, and can place orders without paying tax.

How can I check people's VAT numbers?

Of course, this method assumes that you have already made sure the B2B user has a valid VAT number. This is important because the WooCommerce checkout won't be verifying this.

WooCommerce Wholesale Pro comes with a wholesale registration form, which you can add additional fields to. Add a 'VAT number' field. When a new user registers, you can make sure it's valid. Do this before adding them as a non-tax paying user.

Best WooCommerce plugin for EU VAT compliance

If you’re required to comply with European VAT law, then you’ll have to use a fully featured WooCommerce EU VAT plugin to be fully compliant. This will meet all your European VAT requirements as follows:

  • Automatically charging the correct rate to customers in all European countries.
  • Adding a EU VAT number field to the WooCommerce checkout on the frontend. This integrates with the EU’s central VIES database for validation of customers’ VAT numbers. As a result, the plugin will reverse charge the VAT for customers with valid VAT registration numbers. Ideally, the VAT number validation will be instant and work using AJAX, without reloading the page. (The UK has its own version of this database, which the best VAT plugins also integrate with.)
  • Displaying VAT information in WooCommerce emails, PDF invoices and packing slips.
  • Storing the legally required information such as the customer’s location. It does this by storing data such as their IP address, billing country and shipping address in different meta boxes.
  • Providing a VAT report to make it easy for you to submit details of the VAT that you collect to the EU and UK tax authorities.

If you don't use a plugin with an automated checking function you’ll have to do this research manually every time you get a new EU VAT-based B2B customer. You’ll also need additional WooCommerce functions to cope with increasingly complicated VAT issues. Until recently, web stores have had to use more than one separate plugin, proprietary accounting software, and a good deal of manual work to make it work.

That takes a significant chunk of your time and resources, which is why we recommend the YITH WooCommerce EU VAT plugin to add everything you need.

About YITH’s WooCommerce EU VAT plugin

Here’s how this WordPress plugin will save you a vast amount of time:

VAT-registered EU companies simply enter their VAT number at the checkout. The plugin will check it against the official VIES VAT register to confirm whether it's a B2B or B2C sale. It will verify the customer’s VAT status and remove the VAT charge if it is a registered EU business. The plugin handles reverse-charged B2B sales automatically.

YITH’s EU VAT plugin will also check and store evidence about your customer's location and then check the VAT database for the customer’s local rate of EU VAT, if applicable for the type of sale. After that, it automatically issues VAT receipts and VAT invoices.

Everything gets stored in a portable database, which makes it easy for you to make your quarterly VAT payments to the respective tax authorities.

Finally, this plugin also has good compatibility with other plugins. For example, it plays nicely with plugins like WPML and all of the Barn2 plugins. It also looks good with any WordPress theme or template.

How to add a WooCommerce EU VAT number field

  1. Install the YITH WooCommerce EU VAT plugin on your WooCommerce website.
  2. Secondly, activate it from the "Plugins" menu in the WordPress dashbaord.
  3. Go to the ‘YITH Plugins’ section in your WordPress dashboard, and select ‘EU VAT’.
  4. Under the ‘General’ tab, configure the plugin settings as desired. This includes setting the default country, enabling automatic VAT detection, and choosing how to handle VAT for digital goods.
    YITH WooCommerce EU VAT plugin
  5. Go to the ‘Rates’ tab, and configure the VAT rates for each country (if you want to override any of the built-in rates).
  6. Next, go to the ‘Reports’ tab, and set up how you want the VAT reports to be generated.
  7. Go to the ‘Compliance’ tab, and configure the compliance settings.
  8. Once you have configured all the settings, save the changes. Now the WooCommerce EU VAT plugin should be set up and ready to use.

Try it out! Visit the WooCommerce checkout in the frontend of your website and try entering a VAT number to the field. To test, select France as the country and enter the test VAT number FR27402835961.

If you’re wondering “How do I show VAT in WooCommerce?” then try that out too. Make a test purchase and look at the invoices and PDF invoices. The YITH WooCommerce EU VAT plugin will have added the VAT information to the invoices.

And if you want to know “How do I export VAT?” then check out the reports section. That will make it much easier for you to submit your quarterly VAT MOSS and UK tax returns.

WooCommerce VAT report plugin

Can I add a VAT number field and charge tax for non-EU countries?

Yes, if you use an EU VAT plugin then you can also use it to collect VAT numbers from non-EU countries. They can use the same field on the checkout form.

Just bear in mind that the WooCommerce EU VAT plugin will only add the correct EU VAT rates for European Union countries. As a result, you need to add the tax rates for other countries manually. You can easily do this in the WordPress admin under WooCommerce → Settings → Tax.

How do I change tax to VAT in WooCommerce?

Normally, the WooCommerce plugin uses the word ‘tax’. That may not be what you want in the frontend, especially if you only use tax for European VAT purposes.

You can reword ‘tax’ to ‘VAT’ using a free plugin like Loco Translate. This finds all the strings where ‘tax’ is mentioned and changes it to whatever you prefer. This might be ‘VAT’, ‘IVA’ or something else.

Conclusion

EU VAT requirements can be hard to navigate, whether or not you have access to a top-flight tax consultant. Luckily, adding a VAT number field to the WooCommerce checkout is a simple process. All that matters is that you use the right plugin:

  • The Checkout Field Editor plugin is a great option for adding a basic VAT number field for domestic or B2B purposes.
  • WooCommerce Wholesale Pro is a nice simple solution for globally disabling tax for certain B2B user roles.
  • For those selling digital products to customers in the EU, YITH’s WooCommerce EU VAT plugin is a comprehensive solution. It not only adds a VAT number field but also offers EU VAT compliance features like automatic VAT detection, handling VAT for digital goods, VAT rate configuration, VAT reports, and compliance settings. The advanced YITH WooCommerce EU VAT plugin will save you weeks of work and avoid legal headaches.

With these tools, you can easily collect VAT numbers from your customers and ensure compliance with VAT regulations - wherever your company is based.

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