Step 4 – Configure Shopify Tax & Market Settings

This step ensures Shopify displays prices and applies VAT exemption correctly after VAT validation.

The EU Tax Exemption app does not calculate tax itself.
It relies entirely on Shopify’s tax and market configuration.

Step 4.1 – Shopify tax registrations

Go to: Settings → Taxes and duties

Make sure:

• Your EU tax registrations are correctly set up

• Taxes are enabled for the EU countries you sell to

ℹ️
Settings such as “Include sales tax in product price and shipping” depend on your pricing model,
but are not enforced or required by the EU Tax Exemption app.

Step 4.2 – Configure Market “Tax display” (critical)

The Tax display setting in Shopify Markets must match the checkout logic you selected in Step 3.

Go to:
Settings → Markets → European Union (or your EU market)

Then:

1. Open Taxes and duties (in the Customized section)

2. Locate Tax display

3. Select the correct option

4. Click Done

Choose the correct Tax display option

✅ Draft Order Logic enabled

Set Tax display to:
Show as included

This ensures prices remain consistent when Draft Orders are created and used for checkout.

✅ Draft Order Logic disabled (Standard Checkout Logic)

Set Tax display to:
Dynamic pricing

This allows Shopify to calculate and display VAT dynamically during the standard checkout flow.

B2B-only stores (prices excluding VAT)

💡 Recommended setup for VAT-exclusive B2B stores

If your storefront shows prices excluding VAT:

• Draft Order Logic: disabled

• Market → Tax display: Dynamic pricing

This is the most reliable and supported configuration.

Step 4.3 – Verify correct behavior

After configuring the Market tax display:

1. Add a product to cart

2. Enter a valid foreign EU VAT number

3. Continue to checkout

4. Verify:

   • VAT is removed where applicable

   • Totals and tax lines match expectations

⚠️ Always use the same email address in the VAT form and during checkout.

Most common mistake

❌ Draft Order Logic enabled + Market tax display set to Dynamic pricing
❌ Standard Checkout Logic enabled + Market tax display set to Show as included

These mismatches almost always cause incorrect totals.

Summary

Next steps

Your tax and market configuration is now correct.

➡️ Proceed to Troubleshooting or go live.