Setting Up VAT as a US Based Seller

mattwacekco 2019-02-08 01:22:15 UTC #1

Was wondering how to ensure that when a customer from the EU enters their information in my shopping cart that the appropriate tax is applied. My company is based in Minnesota so I have the "Simple Sales Tax/VAT Calculation
Tax buyers from state/province:" for Minnesota

And I also have selected the "EU VAT Calculation" with my location as based in the US but when I do a test by adding a product to my cart and enter in a country with an appropriate zip code, it doesn't apply that tax like it does when I select my location within the state of Minnesota (sales tax on MN based customers)

E-junkie_Guru 2019-02-10 23:55:28 UTC #2

Due to EU requirements for VAT and the way we integrate with PayPal, we can only calculate VAT as a portion of the total price paid, when we process the buyer's order after they have already completed checkout. This help page explains our Sales Tax & VAT calculation feature in more detail:

mattwacekco 2019-02-11 18:48:36 UTC #3

So for example if i have someone from russia buy my product at $100. Their VAT rate is 20%, will the system add that additional 20% to their bill?

E-junkie_Guru 2019-02-11 22:01:09 UTC #4

No, it will calculate what portion of the $100 gross price paid would constitute that 20% VAT -- i.e.:

price - (price / (1 + VAT rate)) = VAT paid

...e.g., for 20% VAT on a $100 price:

$100 gross - ($100 / 1.20) net = $100 gross - $83.33 net = $16.67 VAT

mattwacekco 2019-02-12 00:04:11 UTC #5

I want the system to apply 20% on top of my sale. I don't want to have to take a cut on my sale price. Basically wanting it to tack on 20% above the $100 that's passed onto the customer to maintain my margins. Is that possible? It does that automatically for residents that purchase from Minnesota

E-junkie_Guru 2019-02-12 00:19:22 UTC #6

That is not possible with VAT due to EU regulations which:

Require all prices displayed to EU buyers to be inclusive of VAT, and
Require establishing the buyer's "place of supply" based on location data which is often unknowable until after the buyer has already completed checkout.

That said, you may find the tips here of interest:

SOLUTIONS FEATURES PRICING DISCOVER PRODUCTS CONTACT HELP DOCS DASHBOARD

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