Understanding the impact of tax collection on displayed prices

By default, Shopify displays product prices without including sales tax and value-added tax (VAT). This means that the product prices displayed to customers matches the prices that you set in your Shopify admin, and taxes are added at checkout. For example, if you sell a product with a price of $100 USD that has a tax rate of 15%, then $15 USD is added to the price of your product at checkout, resulting in a total price of $115 USD.

There are two ways to modify the default behavior of how taxes are displayed:

• Tax-inclusive pricing: You can activate this setting for all the regions that you sell to. When this setting is turned on, all prices that are displayed to your customers already include applicable taxes. This provides a transparent shopping experience that avoids any surprises at the checkout for your customers, and is particularly useful for businesses that operate in regions where tax-inclusive pricing is common or required by law.
• Include or exclude taxes based on the customer's region: You can activate this setting for dynamic tax inclusion, based on your customer's location. When this setting is turned on, prices are automatically displayed in a manner that complies with regional tax laws and customer expectations. For example, your prices for customers in European regions are displayed with tax included, and your prices for customers in the United states are displayed without including tax.

These settings can be used individually or together, which allows you to tailor the way that your prices are displayed to your specific business needs and target markets.

Note

When you activate these features, the way that your prices are displayed is affected. The way that tax is calculated and charged to customers is not. If you choose to include tax in your prices, then the tax portion of a product's price is calculated based on the price that you set for that item.

In addition to these settings, Managed Markets and collecting duties and import taxes at checkout are available. These features might override your store's tax settings to maintain accurate tax calculations in complex international sales.