Make sure your Zoho Books / Inventory settings match the image above (with exception to Mode of Stock tracking).

Using EU VAT Rates

If you are selling to European countries, you will need to use dedicated VAT codes in Exact. Usually there are two VAT Codes; one for within the EU and one for outside the EU. Zoho does not support this out of the box, so you will need to create a custom dropdown field for Sales Orders and Invoices with the label “eu-vat-code”.

The actual VAT Codes for your organization are mentioned in Exact Master Data > VAT codes.