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Tax configuration

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Tax configuration

Get started with tax configurations
Authorization

In order to be able to access this chapter, you need the TaxRates permission.

Configuring tax codes and tax rates can be done via Admin Suite: go to Admin Suite → Financials → Tax Management

The tax management menu has two submenus, one for tax rates:


And one for tax codes:


Adding tax rates​

You can add a tax rate either one by one, by selecting the '+' icon, but you can also download the current overview of tax rates with the 'download' icon. The latter lets you add/edit multiple tax rates in one go. Afterwards upload with the 'upload' icon.

note

When using the upload feature make sure to fill in the action column with a desired action. For that there are 3 options: Create, Delete and Update.

Tax rates require the following values:

  • select to which Country the tax rate needs to apply, further specified with the country Region if necessary
  • select for which Tax code you want to specify a tax rate
  • define the Tax category
  • set a VAT %
  • if needed, you can specify a timeframe during which the tax rate is active using Start date and End date

Tax settings & special case configurations​

Below are some behavior impacting tax settings and special case configurations to keep in mind.

European Union (EU) taxes setting​

The taxes applied are by default based on the country of the sold from organization unit.

Example: If a sales is being made from an organization unit with country specified as "The Netherlands" then the applied tax rate would be the one pertaining to "The Netherlands" (this is default behavior).

A setting called Taxes:UseShippingCountryInEuropeanUnion can influence this behavior. If set with a value true, the country of the sold from organization unit is replaced with the one mentioned in the orders shipping address. Further, if the specified country in the shipping address is not in the list of EU countries, a tax rate of 0% would apply.

Non-European Union taxes setting​

The taxes applied are by default based on the country of the sold from organization unit. However, this one pertains to non-European union countries.

A setting called Taxes:TaxExemptOutsideEuropeanUnion, with a value true, will alter this default behavior. Whereas, the country of the sold from organization unit is replaced with the one mentioned in the orders shipping address. Further, if the shipping address is outside the European Union, EVA will first check if tax configurations exist for that country and apply that (if exists). If not, 0% tax rate would apply.

Example: The setting Taxes:TaxExemptOutsideEuropeanUnion is added with a value true and the sold from organization unit is "NL". In such scenario:

  • Orders without a customer will get the taxes pertaining to the sold from OU.
  • Orders with a customer that has a Dutch shipping address (tax rates configured) will get the configured NL tax rates.
  • Orders with a customer that has an American shipping address (tax rates configured) will get the configured USA tax rates.
  • Orders with a customer that has an Australian shipping address (tax rates not configured) will get exempt from taxes.

Tax exemption​

In your country of operation, a few tax exemption laws may exist and thus apply to you. Let's cover a couple of those and EVAs approach to it.

Exempt groups or entities​


In some countries certain groups or entities are tax exempt, to accommodate such instances the tax exempt checkout option can be used.

Exempt service products​


In some countries sales of service products are tax exempt, while sales of physical are not. However, tax configurations in EVA are done on country-level regardless the nature of the product (service or physical).

In a scenario where both physical and service products are provided by your organization, and this service products tax-exemption applies to you, skipping the country tax configurations is deemed necessary. This can be achieved using a setting called Taxes:Exemption:SkipServiceProducts and a value of true (default is false). The setting means that sales of any service product would be tax-exempt even if it contradicts with the country tax configurations, and thus will ensure that physical products continue receiving regular tax rates applied to them.

Tax-free​

Tax-free configurations is available via a Global blue integration.

Eco taxes​

To manage eco taxes on products, you can create a standard price list using any currently supported method with all currently supported features, like markup, product search templates and date ranges. This price list must then be linked to an organization unit with a price list usage type called EcoTax.

This price list (read: usage type) is used to calculate the eco taxes, separate from any product price and is visible through services like SearchProducts and GetProductDetails. For now we assume this eco tax is already part of the product unit price that is determined through the regular price lists (although this might be expanded to define other setups at a later stage).

When adding a product to your basket, we store the current applicable eco tax as order line information. Because we stated the unit price already includes this eco tax, we explicitly do not incorporate this additional information in further order calculations, like regular taxes or discounts. Applying a 100% discount on such products will yield a free order line, while leaving the stored eco tax information unchanged.

We will return this additional information through GetOrder and similar checkout services.

Corresponding properties such as EcoTaxinTax and TotalEcoTaxinTax are only exposed when setting Orders:Display:ShowEcoTax is set to true (defaults to false). This setting is also exposed as an app setting, allowing the app to make rendering decisions for PDP or CDP or similar.

Adding custom tax codes​

Custom tax codes can be added pretty much the same way as the rates. Fill in the following values, of which Name is mandatory:

  • a Name
  • if needed, a Description
  • if so desired, add a Ledger class
  • a unique Backend ID
  • a Backend Tax code ID, which only applies when using Avalara AvaTax
caution

Tax code names should always be unique and contain at least 1 letter.

This newly created tax code can now be selected when setting up the tax rates. Additionally, this tax code can now be linked to products during product creation.

Dynamic tax codes

Check Avatax for instances of dynamic tax code setups.