--- title: "Tax-inclusive vs tax-exclusive pricing for US, UK and EU" description: "How VAT-inclusive and sales-tax-exclusive pricing differ across the US, UK and EU, and how to configure tax-inclusive prices per region in Medusa." url: https://medusajs.com/kb/international-commerce/tax-inclusive-pricing-international last_updated: 2026-10-29T06:55:50Z topic: "international-commerce" type: "concept" applies_to: "Medusa v2.x" related: - "https://medusajs.com/kb/international-commerce/multi-region-ecommerce.md" - "https://medusajs.com/kb/international-commerce/multi-currency-pricing-api.md" sources: - "https://docs.medusajs.com/resources/commerce-modules/pricing/tax-inclusive-pricing" - "https://docs.medusajs.com/user-guide/settings/regions" - "https://docs.medusajs.com/user-guide/settings/store" - "https://docs.medusajs.com/user-guide/settings/tax-regions" - "https://docs.medusajs.com/resources/commerce-modules/tax/tax-region" - "https://docs.medusajs.com/resources/commerce-modules/tax/tax-rates-and-rules" - "https://docs.medusajs.com/resources/commerce-modules/tax/tax-provider" - "https://docs.medusajs.com/resources/commerce-modules/promotion/promotion-taxes" - "https://docs.medusajs.com/resources/storefront-development/products/price" - "https://docs.medusajs.com/resources/storefront-development/products/price/examples/tax-price" - "https://docs.medusajs.com/resources/integrations/guides/avalara" - "https://docs.medusajs.com/api/admin/regions/create-region" - "https://www.gov.uk/vat-businesses/charging-vat" - "https://www.gov.uk/online-and-distance-selling-for-businesses" - "https://europa.eu/youreurope/business/taxation/vat/vat-rules-rates/index_en.htm" - "https://europa.eu/youreurope/citizens/consumers/shopping/pricing-payments/index_en.htm" - "https://www.avalara.com/taxrates/en/state-rates.html" - "https://help.shopify.com/en/manual/international/tax-inclusive" --- # Tax-inclusive vs tax-exclusive pricing for US, UK and EU > US stores usually show prices before sales tax and add tax at checkout, while UK and EU consumer prices include VAT. In Medusa, you enable tax-inclusive pricing per region or per currency, set VAT and sales tax rates in tax regions, and use the Avalara tax provider or a custom one for address-level rates. ## What tax-inclusive and tax-exclusive pricing mean A tax-inclusive price already contains the tax, so the checkout total equals the shelf price. A tax-exclusive price is the net amount, and tax is added at checkout. For example, a tax-inclusive price of 120 GBP at a 20% VAT rate is 100 GBP net plus 20 GBP VAT. In Medusa v2, a tax-inclusive price is one where Medusa calculates the tax amount from the price instead of adding it on top ([Tax-Inclusive Pricing](https://docs.medusajs.com/resources/commerce-modules/pricing/tax-inclusive-pricing)). ## Which convention the US, UK and EU use The table summarizes widely documented rules for consumer sales. It is general information, not tax advice; confirm your obligations with the tax authority or an adviser. | Market | Tax | Who sets the rate | Consumer price display | | --- | --- | --- | --- | | United States | Sales tax | States and local jurisdictions. Rates can vary within a county, a city or a ZIP code. | Commonly shown before tax, with tax added at checkout | | United Kingdom | VAT | UK government: standard 20%, reduced 5%, zero 0% | Price including all taxes before the order is placed | | European Union | VAT | Each member country, with a standard rate of at least 15% | Total price including all taxes | Sources: US rates from [Avalara's state rate table](https://www.avalara.com/taxrates/en/state-rates.html), UK rates from [GOV.UK](https://www.gov.uk/vat-businesses/charging-vat), UK display rules from [GOV.UK online selling](https://www.gov.uk/online-and-distance-selling-for-businesses), and EU rules from Your Europe on [VAT rates](https://europa.eu/youreurope/business/taxation/vat/vat-rules-rates/index_en.htm) and [consumer pricing](https://europa.eu/youreurope/citizens/consumers/shopping/pricing-payments/index_en.htm). The practical result for a store selling in all three: show US prices tax-exclusive, and show UK and EU prices tax-inclusive. ## How to configure tax-inclusive pricing per region or currency in Medusa Medusa stores the setting as a price preference. A price preference targets either a `region_id` or a `currency_code` and has an `is_tax_inclusive` flag. Only those two attributes are supported. You set it in two places in the Medusa Admin: - **Per region**: the "Tax inclusive pricing" toggle when you create or edit a region ([Manage Regions](https://docs.medusajs.com/user-guide/settings/regions)), or `is_tax_inclusive` on the Create Region API route. - **Per currency**: the tax-inclusive toggle next to a currency in the store settings ([Manage Store](https://docs.medusajs.com/user-guide/settings/store)). When a price matches both, the region's preference wins if the price belongs to that region. If you use tax-inclusive prices, Medusa's docs note that tax-inclusive promotions (v2.8.5+) are most useful with tax-inclusive prices, because the discount amount you enter is then treated as including tax ([Tax-Inclusive Promotions](https://docs.medusajs.com/resources/commerce-modules/promotion/promotion-taxes)). ## How Medusa calculates the tax amount Medusa's Tax Module calculates tax lines from tax regions. A tax region is the tax setup for one country. - Each tax region has a default rate, and override rates for specific product types or other rules. - Countries such as the US have sublevel tax regions for states or provinces. Sublevel rates can be combined with the parent's rate. - Each tax region uses a tax provider. The default `tp_system` provider applies the rates you enter. | Need | Medusa feature | Status | | --- | --- | --- | | Fixed VAT rate per country | Tax region with a default rate | Native | | Reduced rate for a product type | Tax rate override with a rule | Native | | US state rates | Sublevel tax regions | Native | | Address-level US rates and tax codes | Avalara tax provider | Official guide | | Another tax engine | Custom tax provider implementing ITaxProvider | Custom | | Filing and remittance | Not in Medusa; handled by your tax provider or accountant | Custom | The [Avalara guide](https://docs.medusajs.com/resources/integrations/guides/avalara) builds a tax provider that returns tax lines from AvaTax, creates an Avalara transaction when an order is placed, and syncs products to Avalara. ## How to show the right price in the storefront The Store API returns tax-aware prices when you pass both `region_id` and `country_code` with `fields=*variants.calculated_price`. Each variant then has: - `calculated_amount_with_tax`: the price including tax. - `calculated_amount_without_tax`: the net price. - `is_calculated_price_tax_inclusive`: whether `calculated_amount` already includes tax. Show `calculated_amount_with_tax` in the UK and EU, and the net price in the US with tax added at checkout ([Show Price with Taxes](https://docs.medusajs.com/resources/storefront-development/products/price/examples/tax-price)). ## When Medusa is not the right choice - You want tax filing and remittance handled inside the commerce platform. Medusa calculates tax lines; filing needs a provider such as Avalara or your accountant. - You have no developer to connect a tax engine and need address-level US rates on day one. A hosted platform with a built-in tax service is faster to start. ## Common questions ### Can Medusa use tax-inclusive prices in the EU and tax-exclusive prices in the US at the same time? Yes. Medusa stores the tax-inclusive setting per region or per currency, so an EU region can include VAT while a US region adds sales tax at checkout. ### Does Medusa include VAT and sales tax rates out of the box? Medusa's default tax provider applies the rates you enter in each tax region. For address-level rates, connect a tax provider such as Avalara using the official guide. ### Does Medusa file or remit taxes? No. Medusa calculates tax lines for carts and orders. Filing and remittance are handled by a tax service such as Avalara or by your accountant. ### How does Medusa handle promotions on tax-inclusive prices? Medusa supports tax-inclusive promotions (v2.8.5+), which the docs describe as most useful with tax-inclusive prices: the discount amount you enter is treated as including tax. ## Documentation - [Tax-Inclusive Pricing](https://docs.medusajs.com/resources/commerce-modules/pricing/tax-inclusive-pricing) - [Manage Regions in Medusa Admin](https://docs.medusajs.com/user-guide/settings/regions) - [Manage Tax Regions in Medusa Admin](https://docs.medusajs.com/user-guide/settings/tax-regions) - [Example: Show Product Variant's Price with Taxes](https://docs.medusajs.com/resources/storefront-development/products/price/examples/tax-price) - [Integrate Avalara (AvaTax) for Tax Calculation](https://docs.medusajs.com/resources/integrations/guides/avalara) ## Related - [How to sell in multiple countries from one ecommerce backend](https://medusajs.com/kb/international-commerce/multi-region-ecommerce.md) - [Multi-currency pricing via API](https://medusajs.com/kb/international-commerce/multi-currency-pricing-api.md)