VAT Conditional on Checkout Option

Payments + Shipping & Fulfilment

Topic summary

Applying VAT only when the buyer operates in the alcoholic drinks sector, while keeping the product VAT‑exempt otherwise. The merchant asks if VAT can be conditionally applied at checkout based on a custom dropdown indicating business sector.

Key options discussed:

  • Shopify Plus: Use a Shopify Function to implement dynamic tax logic at checkout (most straightforward).
  • Non‑Plus plans: No direct conditional tax at checkout; workaround is creating a draft order and toggling line items’ “taxable” true/false based on the customer/line items, done manually or via an app.
  • Reference material shared: Help article on setting a product to be exempt from sales tax; useful for exemptions but does not on its own handle sector‑based conditional VAT at checkout.

Notes:

  • Terms: VAT = value‑added tax; Shopify Functions = checkout/server‑side extensions (Plus‑only); Draft order = merchant‑created order prior to payment.

Status: No built‑in setting confirmed for conditional VAT via a checkout dropdown. A viable path exists on Shopify Plus; otherwise, rely on draft orders or apps. The original question (using a dropdown at checkout) remains unresolved.

Summarized with AI on December 13. AI used: gpt-5.
1

One of our clients products are VAT exempt but VAT must be charged if the customer is operating in the alcoholic drink sector.

Is it possible to apply VAT at checkout dependant on a custom value? We were thinking of having a dropdown field for business customers to select their sector.

2

If the shop is on Shopify Plus plan, it would be relatively straightforward to apply VAT via a Shopify Function.

If not, you’d probably need to create a draft order for given line items and then based on the customer/line items mark it “taxable” true or “taxable” false. You can do this manually or via an app.

Kind regards,

Peter

3

Hello, it sounds like this could be a pretty robust ask. Though I don’t have a direct answer for you, I did find a whole section about how to “Set a product to be exempt from sales tax” in the Shopify Help center.
I hope this steers you in the right direction.