Prepare your business for 2026 EU tax changes

In today’s world of borderless online shopping, charging the right taxes at the right time for customers in different countries can be a challenge. In the EU especially, VAT rates vary by country and by product type, and keeping on top of the latest numbers and regulations is, frankly, one of the most tedious parts of running an ecommerce business.

However, it’s also one of the most important parts of your business, and it’s essential to check in at least once a year to make sure your site is compliant with not only the correct charges, but the correct reporting. If you sell to countries in the EU, it’s time to take a look at incoming VAT changes for 2026, and go into the new year with the peace of mind that comes from knowing you’re all set for a great year of sales.

Please note that our WooCommerce team are not tax experts. Always check with a local tax professional for verification that your business is following the correct procedures and processes for your products, structure, and location.

Several European countries are implementing new tax rates in 2026, and most of them come into effect on January 1. Increased VAT rates will apply to:

• Lithuania: The rate for essential products and services (formally called a Reduced Rate) increases from 9% to 12%. 
• Netherlands: Accommodation bookings rate increases from 9% to 21%.
• Slovakia: High-sugar and -salt foods will see an increased rate of 23%.

Note that a planned rise in standard VAT from 8.1% to 8.8% in Switzerland has now been delayed to 2028.

VAT rates for the following categories will decrease:

• Finland: The rate for essential products and services will decrease from 14% to 13.5%.
• Germany: The previously temporary rate of 7% on restaurant food and catering services will become permanent.
• Austria: Rates will be reduced to 0% on menstrual and contraceptive products.

Please note that this is an accurate summary at the time of writing, but as always, regulations are subject to change. Please verify all tax rates in countries you sell to with the European Commission.

While it’s always a good idea to stay on top of current VAT rates and ensure your online sales are fully compliant, you can think about taxes a lot less — and spend more time focusing on growth areas of your business — if you use an extension to add localized tax rates to your website and to keep all tax rates up to date. 

Tax extensions usually require a third-party service, which provides you with ongoing access to their database of up-to-the-minute rates for all areas of the globe. If you sell outside your home country, a tax extension is a must-have to reduce the chances of errors, aid bookkeeping, and offload time-consuming accounting tasks.

Four tools for automating localized tax rates

Stripe Tax 

Stripe Tax integrates smoothly if Stripe is your payment gateway, but can also be used with other payment methods on your site. Stripe Tax is a usage-based service, so the pricing is perfect for small- or medium-sized businesses.

Avalara Avatax 

Avalara provides a very flexible service that can handle all types of complex tax scenarios. The extension is also fully integrated with WooCommerce Subscriptions, WooCommerce Customer/Order CSV Export, and Local Pickup Plus. Data can be exported in standard Peppol Network format for government submission.

Quaderno 

Especially handy for EU shops, Quaderno’s automated tax service provides live rates on your WooCommerce site, plus digital invoicing and reporting as required by law.

WooCommerce Tax 

Our free tax plugin can be used to automate tax rates for small EU ecommerce shops with very simple tax needs. If your annual sales are below the OSS reporting level, and you sell physical goods directly to the consumer, then WooCommerce Tax is a great option for your business. If you have a low volume of B2B sales in addition to B2C, you can add the EU VAT Number extension to help manage simple VAT-number-based exemptions.

If you don’t have a tax service on your site and you sell internationally, then you’ll need to set up and maintain your tax rates manually using WooCommerce core tax tables. You can find the required tables under WooCommerce > Settings > Tax in your dashboard menu. 

Depending on the products you sell, you may need to update multiple tables for each country with rate changes. Most products will require Standard rates to apply, but food, books, and other essential items usually have a separate Reduced rate. Additionally, digital products have their own separate rules for taxation in the EU.

If you need a refresh on the basics, here are a few resources to get you started: 

• How to set up manual sales tax tables on your WooCommerce site
• How to configure specific tax setups in WooCommerce
• Setting Up EU VAT Rates for Digital Products

If the new rates for 2026 require certain products on your site to move to a new tax class, then you may need to update a large number of products in bulk. If you have a small number of products, you can run a bulk edit on your Products list, but if you have a large number of products, consider using an extension to help make this change quick and painless.

Handy bulk editors for products in the WooCommerce marketplace include:

• Bulk Edit Products, Prices, and Attributes for WooCommerce
• Bulk Edit Products & Orders for WooCommerce
• Advanced Bulk Edit for WooCommerce

You can also consider exporting your product list, editing the tax class information using a spreadsheet, and re-importing the products; this works especially well if you already have an advanced import and export extension on your site like Import Export Suite for WooCommerce or Product CSV Import Suite.

Like many other countries in Europe and Latin America, government-led digital invoice tracking is coming to Spain. If you are a business or professional established in Spain, or a non-resident entity with a permanent location in Spain, and your business issues digital invoices, then you’ll be required to support VERI*FACTU standards for invoice tracking in 2026. This means:

• Corporate tax taxpayers are required to conform by January 1, 2027;
• Small and mid-size businesses are required to conform by July 1, 2027;
• Established large taxpayers who already use SII (“Immediate Supply of Information”) to submit invoices immediately do not need to change their reporting.

If VERI*FACTU applies to you, you will need to ensure that all digital invoices contain a QR code of the minimum required size that can be scanned to provide additional information. This additional metadata should include the issuer VAT number, serial number, date, total, and a contact URL for verification. The invoice should also indicate it is VERI*FACTU-compliant.

Additionally, you will need to:

• Guarantee that billing records cannot be changed without leaving a trace, to ensure integrity of billing records.
• Use hash chaining to link each record to the next one, to ensure the sequence of records is preserved.
• Have an event log recording system events to track any and all possible data losses. 
• Ensure accessibility, readability, and preservation of all records for at least four years.

You must be able to export or provide billing records to the Tax Agency (AEAT) in electronic form upon request; or, you can set up automated secure transmission of invoice records using VERI*FACTU system to ensure full accessibility to AEAT at all times.

Pro tip: Add the Verifactu extension by Quaderno to your Spanish ecommerce site to ease the transition to required reporting.

Read more about the VERI*FACTU requirements here.

If the incoming tax changes for the EU in 2026 have created a unique and complex tax situation for your business, we’d be happy to help. While we are not tax experts, we are experts in all things WooCommerce, and can guide you to the right set of technical solutions for collecting the right taxes for your products and your customer profile. 

Please reach out to our support team with details on your custom scenario and we can advise on the next steps.

About

Lynn J

Lynn Jatania spent over a decade running her own website-building business, creating websites for small businesses, non-profits, and government agencies that included custom-built features. She has taught classes in WordPress and written extensively about WordPress technical issues for the WooCommerce, Jetpack, and WordPress blogs.