Taxes & Shipping on deposit orders
Learn how taxes an shipping are charged when products are paid with a deposit.
On this page:
- Tax on orders with only partially paid products
- Tax on orders with partially paid and fully paid products
- Taxes in the EU and other VAT countries
Taxes
Downpay relies on Shopify's taxation engine rules. Taxes are charged per product and cannot be set as a split payment to match a product's deposit amount. This section will explain the current structure of taxes when working with deposit payments.
Tax on orders with only partially paid products
Taxes on an order that only has partially paid products will always fully defer to the remaining balance
Tax on orders with partially paid and fully paid products
Taxes on an order that has both fully paid and partially paid products will behave as follows: fully paid product tax will be charged on the due today balance, partially paid product tax will be deferred to the remaining balance.
Taxes in the EU and other VAT countries
In the UK (and most VAT countries), Shopify will charge tax on the first payment — even if it’s just a partial deposit — and does not allow you to defer VAT to the second payment (i.e., the balance).
Under UK VAT law (and similarly in the EU):
VAT is due at the time of the first payment, not when the product ships or is fully paid. Shopify, to stay compliant, automatically charges the full VAT portion based on the entire order total — even if the customer is only paying 10% now.- Shopify always applies tax on the full order amount at first payment, in VAT countries.
- This ensures legal compliance but may surprise customers paying a small deposit.
- You cannot defer VAT to the balance payment in Shopify if you're in the UK or EU.
- In non-VAT countries like the US, tax behavior differs, but Shopify’s native tools may still apply upfront tax unless customized.
If you're selling in the UK or EU, expect VAT to be due upfront, even on partial payments. Shopify follows this rule strictly to keep your store compliant. If you're selling in the US, sales tax usually applies only when the product is delivered — but Shopify may need to be manually configured to reflect that.
Shipping
In this section, we will discuss two concepts around shipping for products purchased with deposits:
- How to charge shipping in deposit products
- When shipping is charged for deposit orders and mixed cart orders.
How to charge for shipping
There are two ways to charge shipping for deposit products, with the default method charging for shipping based on fulfillment due date. This global setting can be changed in the Downpay settings page.
Merchants who prefer to ship products as they become available
By default, shipping for products with a deposit are charged based on their fulfillment due date. The fulfillment due date is set by the deferred payment due date that was chosen in a Downpay purchase option.
One price for shipping option.
Merchants who prefer to ship all products together
Some merchants may want to reduce shipping charges for products in the cart if they always ship all products together when they are all available to be fulfilled. For this use case, there are two options:
- Assign all products to the same purchase option in Downpay . This method works very well when extra shipping is charged of add on products or product options tied to a main product.
Scheduled or On hold order fulfillment statuses in the Shopify admin.- Set Downpay's global shipping setting to
Charge one price for shipping.
Unfulfilled. To use statuses, create a Shopify Flow workflow to place fulfillment orders on hold.When shipping is charged
Shipping cannot be partially charged to match a product's deposit amount. Depending on the items in the cart, it will be charged all at checkout, or in the remaining balance based on rules dictated by Shopify's checkout.
Shipping on orders with only partially paid products
Shipping on an order that only has partially paid products will always fully defer to the remaining balance.
Shipping on orders with partially paid and fully paid products
Shipping on an order that has both fully paid and partially paid products will always charge the shipping cost at checkout.
Updated on: 16/06/2025
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