46% Tax on Order?

enig

I am confused.

The way VAT works is that it should be ZERO if the seller is located within EU but the sale is going to a non-EU entity.

But I see that VAT is charged on every single order except the ones going to UK. Be it going to Germany, Swiss, USA or wherever else. On all the orders I see an Order Total Incl. Tax, then and Order Total Excl. Tax and then a line for the tax itself. But the amount the customer gets charged is always the one with VAT included.

I am aware of the way the Norwegian and UK tax profiles are set. For UK orders I see the

Lawrence

You currently have your main tax profile setup to apply to most of the world, so you likely want to change that to apply to just the EU

enig

Sorry the message got posted prematurely.

The implementation is weird and really counter-intuitive. By definition, VAT *does not apply to sales that are going outside EU*. Meaning - all the countries that are outside EU are VAT exempt. That's why I have all the countries selected - I am expecting the system to understand that I am within EU and to only add the tax to within-EU orders and have 0% tax for orders going outside.

I am guessing this is done so to enable multiple tax profiles for users, but I imagine there are very few users who need that. Would it not make sense to have the system default to what majority of the users need?

The way I am reading 'add the tax rate to the existing prices (which do not include tax) for the customers this tax profile applies to' is from the standpoint of what VAT is. Meaning that it has to be paid by buyers within EU, but not by buyers outside EU. In essence - this profile applies to everyone.

Lawrence

The tax system is based off the information in the tax profiles, so you would need to set them to apply to the relevant countries.

The tax system is setup in this way to support the wide variety of tax systems in the world. Particularly in the USA stores can have many profiles.

enig

I understand. But to me it was not obvious at all that if I add the VAT profile to, for example, USA (and choose the setting where my prices are excl VAT) - that VAT will be ADDED to USA orders.

There should be no VAT added on such orders - that is according to the TAX law. VAT does not apply for such orders. That's all I know.

With that in mind, if I add VAT profile to USA, I am expecting the site to follow the expected behaviour of VAT is designed to do. Which is - VAT does not apply to orders going outside the EU.

Yes of course I add VAT profile to every single country. If I am running a business I have no choosing whether to comply with VAT regulations on all countries or just some. So I will add the profile to all the countries.

'VAT profile applies to USA' and 'VAT is added to USA orders' is not the same thing.

Do you see the conundrum?

Lawrence

The best thing to do would be to take a detailed look at your tax profile, and update it so that it applies tax in the way you would like it to. The tax system is based on the tax profiles, so it will do whatever is set in your tax profiles.

enig

That's what I will do. But do you see where I had the confusion, or not really following my explanation?

Lawrence

I certainly see that tax settings are confusing. Unfortunately it is a complex system to support the variety of tax systems around the world.