Tax Calculations problems

Stellar

As of now, BO calculates TAX on items price, and that leads to totals not being correct between them.

Any help from how other business handle this? We create invoices in our accounting software based on the totals the buyer paid, because entering all items and each prices would require a large amount of work.

The problem is the TAX shown in BO Order/Invoice view is not the same as the TAX that we get from calculating it out of Order Total Excl. Tax...

I have found this EU website:

https://ec.europa.eu/taxation_customs/business/vat/eu-vat-rules-topic/vat-invoicing-rules_en

That links to this one:

https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32006L0112&from=EN#d1e3337-1-1
"TITLE VII
TAXABLE AMOUNT
CHAPTER 2
Supply of goods or services
Article 73

In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply."

And as shown on the Invoice/Order the "taxable amount" is the "Order Total Excl. Tax".

So the "XX% TAX" must be legally correct against the taxable amount "Order Total Excl. Tax" * "XX% TAX".

Could this be a problem someday? I mean, having the website display ZZZ TAX but doing accounting/invoices with YYY TAX based on paid total?

PD: I understand why BO calculates it from item prices, as it has to shown TAX inclusive prices on stores etc.

Thanks

Lawrence

Just to add to this discussion, as I didn't think of it in our previous mails. Of the three calculation options (per order, per line, per item), per order wouldnt work if you have any zero rated items (like instructions). So if you get a £100 order with £10 of parts and £90 of instructions, it will show "20% VAT £2". Which may look odd, but the alternaitve of ignoring the zero rating would presumably be illegal.

Hoddie

It's usual here (though I don't know if it's legally mandated, never checked) to show:

£10.00 @ 20% TVA £2.00
£90.00 @ 0% TVA £0.00
Total TVA £2.00

Edit to add: if I remember rightly, that's how fast food takeaways in the UK (McDonald's, etc.) deal with it too.

Maybe that would work?

Lawrence

@Hoddie That is very true. I just wanted to try to further highlight why calculating tax on an order basis would not be suitable for Brick Owl.

Stellar

My question is focused about the accounting of this discrepancies, as if I say to the Gov that I sold X amount with XX% VAT then it should be equal to the TAX in all orders... and now it is not.

And what would happen when EU starts asking marketplaces to collect that TAX at point of sale? How can I create correctly legal invoices of my sales to account?

Hoddie

It is a question of rounding, which should be tackled as per official guidance. This would depend on the jurisdiction, but I suspect most would expect the calculation to be done on the total order value, split by rates, rather than the 'per lot' value, as this would provide the closest to expected result. It also allows for much simpler invoices.

Stellar

Indeed it is done now "per item", "per lot" value would be closer but still off...