Automatically show prices inclusive or exclusive of tax based on customer location
Increase conversion by automatically following local conventions for displaying prices as inclusive or exclusive of tax.
What's new?
We've added a new location value for price.tax_mode to specify that prices should be automatically presented inclusive or exclusive of tax based on a customer's location.
How it works
Customers have different expectations for how prices should be presented based on their location. For example, customers in the US typically expect prices to be exclusive of tax, while customers in Europe typically expect them to be inclusive of tax.
Previously, you could use the tax_mode field when creating or updating prices to determine whether they are inclusive or exclusive of tax. This meant that to present tax-inclusive or tax-exclusive prices for specific countries, you'd need to create multiple prices for the same product and write code to determine when to show them.
Now, we've added a new location value for the tax_mode field that lets you specify that prices should be automatically presented inclusive or exclusive of tax based on customer location. This helps you increase conversion by creating a more localized purchase experience for customers.
Example
Assuming a price of $10.00 and a tax rate of 10% with automatic currency conversion turned off, this example shows how prices are presented based on the customer's location.
In the US, prices are typically exclusive of tax. On a checkout, Paddle calculates and presents tax like this:
| Price (excl. of tax) | 10.00 |
| Subtotal | 10.00 |
| Tax (10%) | 1.00 |
| Total | 11.00 |
In the EU, prices are typically inclusive of tax. On a checkout, Paddle calculates and presents tax like this:
| Price (incl. of tax) | 10.00 |
| Subtotal | 9.09 |
| Tax (10%) | 0.91 |
| Total | 10.00 |
Summary of changes
This is a summary of the changes to fields in the Paddle API:
| Field | Change | Notes |
|---|---|---|
price.tax_mode | New enum value | Now accepts location value to specify that prices should be automatically presented inclusive or exclusive of tax based on customer location. |
Next steps
This change is available in version 1 of the Paddle API.
It's a non-breaking change, meaning it doesn't impact existing integrations. Existing prices continue to work exactly as before.
To start automatically presenting prices as inclusive or exclusive of tax based on customer location, create or update prices using the API or the Paddle dashboard. Set the tax_mode to location to automatically present prices as inclusive or exclusive of tax based on customer location.
The option to set location as the default tax_mode for new prices is scheduled to land later in Q4 2025.