Tax guidelines by country
- Topics:
- Taxes
CREATED FOR:
- Beginner
- Intermediate
- Admin
- User
U.S. tax configuration
These recommended settings can be used for most tax configurations for stores within the United States.
| Tax option | Recommendation |
|---|---|
| Load catalog prices | Excluding tax |
| FPT | No, because FPT is not taxed. |
| Tax based on | Shipping origin |
| Tax Calculation | On total |
| Tax shipping? | No |
| Apply Discount | Before tax |
| Comment | All tax zones are the same priority; ideally, a zone for state and one or more zones for zip code lookup. |
Tax classes
| Tax class | Recommended setting |
|---|---|
| Tax class for shipping | None |
Calculation settings
| Option | Recommended setting |
|---|---|
| Tax Calculation Method Based On | Total |
| Tax Calculation Based On | Shipping Origin |
| Catalog Prices | Excluding Tax |
| Shipping Prices | Excluding Tax |
| Apply Customer Tax | After Discount |
| Apply Discount on Prices | Excluding Tax |
Default tax destination calculation
| Option | Recommended setting |
|---|---|
| Default Country | United States |
| Default State | State where business is located. |
| Default Post Code | The postal code that is used in your tax zones. |
Price display settings
| Option | Recommended setting |
|---|---|
| Display Product Prices in Catalog | Excluding Tax |
| Display Shipping Prices | Excluding Tax |
Shopping cart display settings
| Option | Recommended setting |
|---|---|
| Display Prices | Excluding Tax |
| Display Subtotal | Excluding Tax |
| Display Shipping Amount | Excluding Tax |
| Display Gift Wrapping Prices | Excluding Tax |
| Display Printed Card Prices | Excluding Tax |
| Include Tax in Grand Total | Yes |
| Display Full Tax Summary | Yes |
| Display Zero Tax Subtotal | Yes |
Orders, invoices, credit memos, and display settings
| Option | Recommended setting |
|---|---|
| Display Prices | Excluding Tax |
| Display Subtotal | Excluding Tax |
| Display Shipping Amount | Excluding Tax |
| Include Tax in Grand Total | Yes |
| Display Full Tax Summary | Yes |
| Display Zero Tax Subtotal | Yes |
Fixed product taxes (FPT)
| Option | Recommended setting |
|---|---|
| Enable FPT | No, except in California. |
UK tax configuration
These recommended settings can be used for most tax configurations for stores within the United Kingdom.
UK B2C tax configuration
| Tax option | Recommendation |
|---|---|
| Load catalog prices | Excluding tax |
| FPT | Yes, including FPT and description |
| Tax based on | Shipping Address |
| Tax Calculation | On total |
| Tax shipping? | Yes |
| Apply Discount | Before tax, discount on prices, including tax. |
| Comment | For merchants marking up supplier invoices (including VAT). |
U.K. B2B tax configuration
| Tax option | Recommendation |
|---|---|
| Load catalog prices | Excluding tax |
| FPT | Yes, including FPT and description |
| Tax based on | Shipping Address |
| Tax Calculation | On item |
| Tax shipping? | Yes |
| Apply Discount | Before tax, discount on prices, including tax. |
| Comment | For B2B merchants to provide simpler VAT supply chain considerations. Tax calculation on row is also valid; however, check with your taxing jurisdiction. Setup assumes that a merchant is in the supply chain and that goods sold are used by other vendors for VAT rebates and so on. This definition makes it easy to discern tax by item for faster rebate generation. Note: Some jurisdictions require different rounding strategies not currently supported by Commerce, and that not all jurisdictions allow item or row level tax. |
Canada tax configuration
IMPORTANT| Tax option | Recommendation |
|---|---|
| Load catalog prices | Excluding tax |
| FPT | Yes, including FPT, description, and apply tax to FPT. |
| Tax based on | Shipping origin |
| Tax Calculation | On total |
| Tax shipping? | Yes |
| Apply Discount | Before tax |
The following example shows how to set up GST tax rates for Canada and PST tax rates for Saskatchewan, with tax rules that calculate and display the two tax rates. This information outlines an example configuration; be sure to verify the correct tax rates and rules for your tax jurisdictions. When setting up taxes, set the store scope to apply the configuration to all applicable stores and websites.
- Fixed product tax is included for relevant goods as a product attribute.
- In Quebec, PST is referred to as TVQ. If you want to set up a rate for Quebec, make sure to use TVQ as the identifier.
Step 1: Complete tax calculation settings
-
On the Admin sidebar, go to Stores > Settings > Configuration.
-
For a multisite configuration, set Store View to the website and store that is the target of the configuration.
-
In the left panel, expand Sales and choose Tax.
-
Click to expand each section on the page and complete the following settings:
Tax Calculation Settings
TotalShipping AddressExcluding TaxExcluding TaxAfter DiscountExcluding TaxCustom Price (if available)Tax Classes
Shipping (shipping is taxed)Default Tax Destination Calculation
Canada* (asterisk)Shopping Cart Display Settings
YesYesYesFixed Product Taxes
YesIncluding FPT and FPT descriptionNoYesNoStep 2: Set up Canadian Goods & Services Tax (GST)
To print the GST number on invoices and other sales documents, include it in the name of the applicable tax rates. The GST appears as part of the GST amount on any order summary.
Manage Tax Zones & Rates
Canada-GSTCanada* (asterisk)No* (asterisk)5.0000Step 3: Set up Canadian Provincial Sales Tax (PST)
Set up another tax rate for the applicable province.
Tax Rate Information
Canada-SK-PSTCanadaSaskatchewanNo* (asterisk)5.0000Step 4: Create a GST tax rule
To avoid compounding the tax and to correctly display the calculated tax as separate line items for GST and PST, set different priorities for each rule and select the Calculate off subtotal only checkbox. Each tax appears as a separate line item, but the tax amounts are not compounded.
Tax Rule Information
Retail-Canada-GSTRetail CustomerTaxable GoodsShippingCanada-GST00Step 5: Create a PST Tax Rule for Saskatchewan
For this tax rule, make sure to set the priority to 0 and select the Calculate off subtotal only checkbox. Each tax appears as a separate line item, but the tax amounts are not compounded.
Tax Rule Information
Retail-Canada-PSTRetail CustomerTaxable GoodsShippingCanada-SK-PT10Step 6: Save and test the results
-
When complete, click Save Config.
-
Return to your storefront and create a sample order to test the results.
EU tax configuration
The following example depicts a store based in France that sells 100k+ Euros in France and 100k+ Euros in Germany.
- Tax calculations are managed at the website level.
- Currency conversion and tax display options are controlled individually at the store view level (Select the Use Website checkbox to override the default).
- By setting the default tax country, you can dynamically show the correct tax for the jurisdiction.
- Fixed product tax is included for relevant goods as a product attribute.
- It might be necessary to edit the catalog to ensure that it shows up in the correct category/website/store view.
Step 1: Create three product tax classes
For this example, it is assumed that multiple VAT-Reduced product tax classes are not needed.
-
Create a VAT-Standard product tax class.
-
Create a VAT-Reduced product tax class.
-
Create a VAT-Free product tax class.
Step 2: Create tax rates for France and Germany
Create the following tax rates:
State/Region: *
ZIP/Postal Code: *
Rate: 20%
State/Region: *
ZIP/Postal Code: *
Rate: 5%
State/Region: *
ZIP/Postal Code: * Rate: 19%
State/Region: *
ZIP/Postal Code: *
Rate: 7%
Step 3: Set up the tax rules
Create the following tax rules:
Tax Class: VAT-Standard
Tax Rate: France-StandardVAT
Priority: 0
Sort Order: 0
Tax Class: VAT Reduced
Tax Rate: France-ReducedVAT
Priority: 0
Sort Order: 0
Tax Class: VAT-Standard
Tax Rate: Germany-StandardVAT
Priority: 0
Sort Order: 0
Tax Class: VAT-Reduced
Tax Rate: Germany-ReducedVAT
Priority: 0
Sort Order: 0
Step 4: Set up a store view for Germany
-
On the Admin sidebar, go to Stores > Settings > All Stores.
-
Under the default website, create a store view for Germany.
-
Next, do the following:
-
On the Admin sidebar, go to Stores > Settings > Configuration.
-
In the upper-left corner, set Default Config to the French store.
-
On the General page, expand
France. -
Complete the locale options as needed.
-
-
In the upper-left corner, choose the German Store View.
-
On the General page, expand
Germany. -
Complete the locale options as needed.
Step 5: Configure tax settings for France
Complete the following general tax settings:
Shipping (shipping is taxed)TotalShipping AddressIncluding TaxIncluding TaxAfter DiscountIncluding TaxCustom Price if availableFrance* (asterisk)YesIncluding FPT and FPT descriptionNoYesYesStep 6: Configure tax settings for Germany
-
On the Admin sidebar, go to Stores > Settings > Configuration.
-
In the upper-right corner, set Store View to the view to the German store and click OK to confirm.
-
In the left panel, expand Sales and choose Tax.
-
In the Default Tax Destination Calculation section, do the following:
-
Clear the Use Website checkbox after each field,
-
To match your site’s Shipping Settings point of origin, update the following values:
- Default Country
- Default State
- Default Post Code
This setting ensures that tax is calculated correctly when product prices include tax.
-
-
When complete, click Save Config.