Changes to VAT calculation behavior

[speedie]

E-JunkieGuru



In the list of file types and extensions made on the first page you did not mention .exe among the digital downloads. I understand these are subjected to VAT. In Australia I am required to pay GST of 10% on all sales to Australians. So long as your download log has the appropriate information, I will be content with that. Finally, I think a 13% VAT/GST built into the price sounds reasonable. Since I have no competition I do not have to worry about what others are doing. My .exe eBooks will be very affordable considering their content.

[E-junkie_Guru]

That list of filename extensions only determines what we regard as an "ebook" product as distinct from any other downloadable product, to accommodate jurisdictions that specify a reduced VAT rate on ebook sales in particular while other downloads are subject to the regular VAT rate.



Our VAT calculation feature is only intended to handle the rather complicated requirements of EU VAT. However, for Australian GST, you won't need to include a markup in your item prices to cover GST, as that can be handled using normal sales tax-style calculation; just enable Sales Tax/VAT in your products' settings, then in Seller Admin > Sales Tax/VAT Settings checkmark "Tax buyers from country", select Australia, and enter your domestic GST rate as the tax rate.

[E-junkie_Guru]

We have recently updated our Sales Tax & VAT help page to explain our new VAT calculation behavior and the new Transaction Log fields that report data for VAT purposes:

http://www.e-junkie.com/ej/help.tax.htm



We have also updated our help pages for Thank-you Emails and Thank-you Pages to document new template tags we now support to insert VAT details:

http://www.e-junkie.com/ej/help.custom.thankyou-email.htm

http://www.e-junkie.com/ej/help.custom.thankyou-page.htm



Here's a quick outline of the new template tags for VAT:



For Common Thank-you Page HTML and all Thank-you Emails:

[%country_digital%] = VAT place of supply for digital items

[%country_tangible%] = VAT place of supply for non-digital items

[%vat_digital%] = Order subtotal of VAT calculated for digital items

[%vat_tangible%] = Order subtotal of VAT calculated for non-digital items



For product thank-you page Message (HTML) and product thank-you Email Message:

[%vat_country%] = VAT place of supply for the item

[%vat_rate%] = VAT rate applicable for the item's place of supply



You may notice we do not report VAT amounts calculated for individual items; this is because VAT must be calculated on whole-order subtotals of item prices for each applicable VAT rate. Due to compound rounding errors, any sum of rounded VAT amounts for individual items may differ slightly from a VAT amount calculated on the sum of those items' prices, so the regulations mandate the latter method.

[lorilin]

E-junkieGuru

lorilinThe only thing I'm still confused about is shipping charges. I have to charge EU VAT on shipping as well. Now I'm set up to have variable shipping charges based on weight, and whether the customer wants "signed for" delivery or not.



I'm guessing I can edit/redo all my shipping rules so that the EU shipping prices include VAT, and the non-EU shipping prices don't. Am I right about this being the simplest way?

Actually, the simplest thing you could do would be to set Handling as a % of Shipping in your Cart Shipping Settings. That'd just boost all your shipping calculations by whatever % you specify for every order. :^)

Other stuff is now off my desk so I can start working on this. It looks like I have to set a handling fee globally in



manage your seller account> Edit Ejunkie shipping settings > Handling



So all customers -- EU or non-EU would get charged the handling fee. Maybe I missing something? I want to charge VAT (or a 21% handling fee over the shipping charge) on shipping only to EU customers. Don't think my non-EU customers would appreciate a 21% handling fee on the shipping.



Thanks for your patience with my questions. I'm kind of freaking out about this whole thing, because I MUST be ready to process thousands of orders within the next two weeks. At this point, all I want to do is cry.

[E-junkie_Monster]

Hi Lorilin,



We really sympathize, the EU's changes are causing a lot of problems for everyone.



Keep in mind that if you are using our VAT tools we'll already be calculating the tax on shipping automatically. Guru's suggestion was meant to raise the shipping rate for everyone, but not necessarily by 21%, you just need to spread the cost out amongst all of your buyers to balance out what you expect to pay on shipping VAT.



It is possible to create country specific shipping rates to allow you to give each country in the EU an adjusted shipping cost that accounts for their individual VAT rates instead, but that will take a lot more time and effort out of your already cramped schedule. A temporary boost on the handling percentage could be the temporary fix that allows you to focus on other matters for now.



I took a look at your current shipping settings and it looks like you've already set up a series of flat rates for individual countries based on order weight. That means you don't need to rework your entire shipping set up, you just need to redo the rules for EU countries to raise their rates according to their individual VAT requirements. It will still be time consuming, but at least you won't be starting from scratch.

[lorilin]

Thanks, E-junkieMonster! I'm going to have to just dig into this and figure it out. Unfortunately I can't handle the uncertainty and massive stress of trying to guesstimate how much VAT I'll be liable for and charge the extra to all my customers, trying to spread it out. Anyway, it's bedtime here. Starting fresh tomorrow...I think working through a concrete example might clear things up. Thanks again!

[lorilin]

Hi again, guys...trying to focus on a workaround that will get me through my upcoming campaign. Here's my plan of action -- at the bottom you will see the snag that I'm running into (point 4 below). If I can solve that, then I'll be able to manage OK. If anything else looks wrong, please let me know.



1) I see how I can do the shipping VAT now -- it will just mean deleting all my EU shipping rules and creating new ones that have the total price including VAT. That's doable with a few hours of concentrated work.

Check



2) The next thing is splitting up my website into an EU site and non-EU site, and hoping customers will click on the right store from the index page. I've done it that way pre-ejunkie, and it worked Ok. Also a couple of hours of concentrated work.

Check



3) Next is to adjust my add-to cart buttons to incorporate the new VAT-included prices -- EU prices will include VAT, non-EU prices will not. I will then have to hard code the buttons when I place them in the site (deleting the parts that aren't relevant) so EU customers only see the EU options on the EU pages, etc. Also a few hours of concentrated work.

Check



4) But now I run into what looks like an administrative NIGHTMARE. What about inventory control? It's been a lifesaver up till now. But now it looks like I will have to divide my inventory among the VAT-priced items and the no-VAT priced items.



Imagine I have 10 units of CD1 in stock. I don't know if I can get more, so I don't want to oversell them. Normally, inventory control takes care of that.



The only way I can see to keep tabs on my inventory with this new VAT problem is to arbitrarily divide up my inventory among the VAT no-VAT options, like 5 units each below:



SKU,Price,grams,Stock,,



CD1_VAT,24.20,250.00,5,,

CD1_NOVAT,20.00,250.00,5,,



That means that if I sell out of, say, the VAT priced ones, I'll have to manually adjust the button code and move over units from the NOVAT section.



This is gonna get unwieldy really fast when I have hundreds of orders coming in for many different items, shirt sizes, etc. Is there any way to get around this and have some kind of central control of the inventory? Something I'm missing somewhere?



Hope I've managed to explain this OK -- if not, let me know!

[E-junkie_Monster]

Our help page here covers two ways to increase prices for EU buyers to cover VAT, and it mentions what you describe by creating variants as "Approach B" -- if you try Approach A instead then you don't need to add variants or worry about splitting up your inventory:



http://www.e-junkie.com/ej/tips.tax.vat-pricing.htm



With Approach A from that page you are just adjusting the price by adding an extra parameter to your button links, so the inventory is tracked from the same value no matter whether the buyer is paying the EU or non-EU price. It should also be easier to implement overall.

[lorilin]

Ahhhh! Now that I'm actually working with concrete examples, it's all starting to make sense! I think approach A is going to work. Thanks so much for the quick feedback...I'm gonna work on this today and see how I get on.

[lorilin]

EDIT: OK, I tested this and it seemed to work. Slooooowly getting there! :-)





**********





Almost there! My button code is not in the same order as the example...can I put the &amount code like below (replacing ITEMID, MYEJUNKIE ID, and XX.XX with the actual values)? The button below is for a shirt.





<form action="https://www.e-junkie.com/ecom/gb.php?c=cart&i=ITEMID&cl=MYEJUNKIEID&ejc=2&amount=XX.XX" target="ejejc" method="POST" accept-charset="UTF-8">

Size:<br/>

<select name="o1">

<option value="SMALL">SMALL</option>

<option value="MEDIUM">MEDIUM</option>

<option value="LARGE">LARGE</option>

<option value="X-LARGE">X-LARGE</option>

<option value="XX-LARGE">XX-LARGE</option>

</select>

<br/>

<input type="image" src="http://www.e-junkie.com/ej/ejadd_to_cart.gif" border="0" alt="Add to Cart" class="ec_ejc_thkbx" onClick="javascript:return EJEJC_lc(this.parentNode);"/>

</form>

[neo]

Thanks ejunkie Guru, can you just comment on the fact that non-Eu customers would be charged a lot more than they are needing to pay?



Regards,

http://explorequotes.com/life-quotes/

[E-junkie_Monster]

Unfortunately, rising prices and people paying more than they would otherwise need to pay for products and services is the natural consequence of taxes.

[enzo]

Hello. I am trying to sell from EU-country tangible goods to EU and non-EU buyers.



You are suggesting to create two buttons, one for EU with VAT, one for non-EU without VAT.

How do I restrict shipping countries for each button respectively? If somebody clicks non-EU (without VAT) button, then he should not be allowed to choose EU country as shipping destination and vice-versa.

[E-junkie_Guru]

That would only be necessary if you want non-EU buyers to pay a lower price than EU buyers. If you're fine with everyone paying the same price worldwide, you can use the same buttons for everyone, and we'll only calculate what portion of that price constitutes VAT when the buyer is located in the EU.



If you do want to offer a lower price to non-EU buyers, we would recommend setting up separate sales pages/sections of your site, one with only EU buttons and the other with only non-EU buttons, so a buyer would need to select EU or non-EU to be directed to the appropriate sales page for their location. It may be possible to accomplish this automatically with custom scripting in your site, e.g. using GeoIP to determine the buyer's location; if you'd like some help setting that up, we can recommend the independent developers for hire here:

http://www.e-junkie.com/ej/resources.htm

[enzo]

Ok, it is best to create separate page/section for EU and non-EU buyers. If I understand correctly, I would need to create two eJunkie accounts if I would want to restrict shipping destinations for each section separately.

[E-junkie_Guru]

Yes, shipping destinations can only be restricted on an account-wide basis, so if you need different sets of destination restrictions, you would need separate accounts for those.