UK/European Union

 

Question: How do I configure taxes in the UK?
Our online shop is based in the UK. In addition to the UK, we ship to France, Belgium, Germany and the US. Right now the UK VAT is set at 15.00%. I would like my displayed prices to include the VAT. How do I set up the UK VAT in this situation?
 
Answer:

1. Go to Store Settings >> Taxes. In the section Tax Names, set two taxes: VAT (check included into product price) and VAT adjustment.

2. Go to the Tax Display Options section. For displayed text "VAT:" set the tax "VAT+VAT adjustment" (see the picture below) by clicking the Add button. For the tax VAT adjustment select “never display”. VAT adjustment is used only to adjust taxes for shipping and handling charges and discounts, and is not visible at checkout.


3. Now, go to the section Tax Rates. Product Tax Class - Taxable and set up taxes as shown below:

4. Also in the tax setting section (use the Tax Settings button at Store Settings >> Taxes), set "Display product prices including taxes" to YES as shown below.


So, with these settings all your products in the storefront will have VAT-inclusive prices. When you go to checkout, VAT will be adjusted by adding VAT adjustment for the shipping cost and deducting VAT for discounts (both global and quantity discounts), depending on the country of destination. VAT adjustment is set for EU countries to which you ship (Belgium, France, and Germany); for the US, VAT will be zero.

Finally, your tax page should look similar to this:

IMPORTANT! This explanation is only an example, and tax values and rates may change over time. To determine the exact tax rates and tax formulas in your case, please consult your accountant.


  © 2004-2011 Pentasoft Corp. Corp. All Rights Reserved.