By law, Paddle must apply VAT / Sales Tax to any transaction where it is applicable.
Vendors can choose how they want to handle sales tax in the Sales Tax Settings page in the Paddle dashboard. There are two options available to you as a seller;
- Include VAT in the price (VAT inclusive pricing)
- Add VAT to the price (VAT exclusive pricing)
By setting VAT inclusive prices, the price you’ve input will be the price the customer sees, and the sales tax will come of out this price. Whereas, if you choose to have VAT added on, the % rate of sales tax the customer is due to pay (eg. 20% in UK, 18% in Spain, etc) will be added on top of the product price you’ve set.