A Netherlands-based plant seller faces an issue where Shopify’s dynamic pricing incorrectly deducts the standard 21% VAT rate instead of the reduced 9% rate applicable to plants when calculating prices for other EU countries. This causes significant revenue loss—for example, a product priced at €109 in the Netherlands should cost €125 in Croatia (25% VAT), but the system calculates €112.60 instead.
Key Developments:
Support confirmed this is a known limitation with no planned fix for reduced VAT rates
Dynamic pricing currently cannot accommodate differentiated tax rates properly
Potential Workaround:
A recent platform update introduced per-market tax settings with three options:
Dynamic pricing (still ignores reduced rates)
“Don’t add tax” (includes tax in total price and correctly applies reduced rate overrides)
Add taxes (shows net prices, adds tax at checkout)
One user suggests a hybrid approach: using “don’t add tax” for EU markets to properly handle reduced rates, while applying dynamic pricing with a 10% adjustment for non-EU markets like Switzerland. This workaround remains untested but may resolve the issue for sellers with similar reduced-rate products.
Summarized with AI on October 29.
AI used: claude-sonnet-4-5-20250929.
I’m located in the Netherlands and we have two VAT-rates, 21% and the lowered rate of 9%
My shop sells plants and these are taxed at 9%.
Because for Dutch tax laws I have to charge the VAT of the destination countries and for some countries those are very different. Croatia for example has 25%. Because I don’t want to pay that difference myself I use dynamic pricing.
So shopify deducts the Dutch VAT, adds the Croatian one and that will be the displayed price.
The problem is that Shopify deducts the 21% rate, not the 9% even though in Markets-European Union-Netherlands it is set to 9%
So A product that would cost 109 euro in the Netherlands should cost 125 euro in Croatia:
(109/1,09) x 1,25 = 125,-
But it calculates:
(109/1,21) x 1,25 = 112,60
Can I change the percentage that Dynamic pricing deducts to get to the base price?
Thank you for the reply and that really makes dynamic taxes unusable, too bad.
I talked to support as well and still have an open ticket pending but FYI: they rolled out a change today where the tax settings can be put on a per market basis:
dynamic pricing (which calculated net prices based on the main percentage but ignores the reduced rate - same behaviour as before)
don’t add tax (which confusingly just has the effect of tax being included in the total price but correctly uses the overrides for reduced rate)
add taxes (which shows net prices and only adds the taxes in the checkout as a separate line)
I still have to test it in detail, but I think the following set-up will work for us:
Market 1: Germany (main country) + Market 2: Europe = don’t add taxes (aka prices including Tax) , this shows the prices including the respective tax for each EU country.
Market 3: Switzerland (and the rest of the world) where we need to show prices excluding tax: dynamic taxes in combination with a price adjustement of +10%
Swiss prices for our customers will be higher than before, but as they have very low VAT + high income anyway, this will still be OK and as they switch from incl. taxes to excl. taxes its not obvious.
→ I hope this helps (especially given that “don’t add tax” respects the overrides and reduced rates)
