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UK Tax calculation issues
 
matbennett
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Can anyone confirm whether the VAT issues have been resolved?

I see that the support issue has been marked as resolved, but there does not appear to be any note about what was fixed (I’ve also seen people complaining elsewhere about issues being marked as resolved when they are not - hence my checking).

I’m quite interested in looking further in to Magento and possibly becomming a partner with view to offering it to our clients.  However the VAT issue would be an absolute deal breaker for us as we rarely deal with any non registered companies.

 
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golles
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matbennett - 14 July 2008 04:56 AM

Can anyone confirm whether the VAT issues have been resolved?

I see that the support issue has been marked as resolved, but there does not appear to be any note about what was fixed (I’ve also seen people complaining elsewhere about issues being marked as resolved when they are not - hence my checking).

I’m quite interested in looking further in to Magento and possibly becomming a partner with view to offering it to our clients.  However the VAT issue would be an absolute deal breaker for us as we rarely deal with any non registered companies.

I believe being marked as resolved actually means it is resolved in the next release - i.e. the code work has been done but not necessarily in the latest ‘production’ release - thats my take anyway

TAX / VAT is absolutely fine if you just ship to 1 area - e.g. mainland UK

the VAT issues become apprent when you offer shipping outside of say the UK mainland where tax rates vary and tax on shipping varies etc.

I believe (although I have not tested) that this is resolved in v1.1 as the tax ‘modules’ have had a major overhaul from what I have read elsewhere.

V1.1 is still in beta at the moment - but is available for download if you would like to test.

 
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J_T_
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Can anyone on 1.1.2 confirm whether they still suspect any VAT issues?

We do ship to Channel Islands, EU countries and Switzerland/Norway etc. so need tight VAT control.

 
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Dave Smith
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I have 1.1.2 installed an I still have the same VAT/Tax issue.

 
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J_T_
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Dave, can you please describe the issue you are having?

 
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Dave Smith
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Sure.

I have CD product which is £10.21 + VAT or £12 inclusive of VAT. I have VAT set to calculate via customer billing address. This works fine with UK customers.

Any customer outside the EU (who don’t pay VAT) end up paying £10.21. We would normally still charge £12 and get the extra £1.79

Or do we just have to loose the extra £1.79 on international orders?

 
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Ross
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Dave Smith - 13 August 2008 05:07 AM

Sure.

I have CD product which is £10.21 + VAT or £12 inclusive of VAT. I have VAT set to calculate via customer billing address. This works fine with UK customers.

Any customer outside the EU (who don’t pay VAT) end up paying £10.21. We would normally still charge £12 and get the extra £1.79

Or do we just have to loose the extra £1.79 on international orders?

That sounds like Magento is doing the right thing. If you want the ex-vat price to be different for non-EU locations, maybe you could have a different ‘store’ and set the prices (in US$?) to whatever you want.

What about for EU (non-UK) locations?  Does Magento calculate the tax correctly there?

 
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carsal
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Hi,
I also have a problem calculating TAX amount in the backend. When I create a new order through the backend for an offline sale and add the product, the order correctly calculates tax base price, tax and total, but once I try to change the items price with a Custom Price, the total remains the same as prior to the price update, and the tax is calculated subtracting the custom price from the total.
For example for a 10% tax rate, if original price including tax is $20.00:
SUBTOTAL $18.80
TAX $1.82
TOTAL $20.00

If I use a custom price of $17.00 incl tax, I would introduce $15.45 as custom price, and what I get is:
SUBTOTAL $15.45
TAX $4.55
TOTAL $20.00
As you can see the total should be $17.00 and tax would be $1.55.
Is this a bug or a misconfiguration (I have tried modifying several payment parameters with no success.

 
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J_T_
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Dave Smith - 13 August 2008 05:07 AM

Sure.

I have CD product which is £10.21 + VAT or £12 inclusive of VAT. I have VAT set to calculate via customer billing address. This works fine with UK customers.

Any customer outside the EU (who don’t pay VAT) end up paying £10.21. We would normally still charge £12 and get the extra £1.79

Or do we just have to loose the extra £1.79 on international orders?

Yes, that’s almost exactly how it’s supposed to work. VAT-wise anyway.

If you want to achieve what you say, charge £12 anyway (and therefor make more money than on UK orders) you can make different Store Views and have different prices. But I doubt you can easily make it happen out of the same UK prices, therefor needing a different Store View.

However, you base your VAT on the billing address, which in my understanding is wrong. All the VAT info I have read, is only concerned with the movement of goods, not with the flow of money.

http://www.hmrc.gov.uk/vat/int-exports.htm
http://www.businesslink.gov.uk/bdotg/action/detail?r.l1=1079717544&r;.l3=1078128943&type;=RESOURCES&itemId;=1078129512&r;.l2=1077717209&r;.s=m

If you supply goods to another EU country these sales are now technically known as despatches or removals rather than exports. The term ‘exports’ is reserved to describe sales to a country outside the EU.

VAT on exports of goods to non-EU countries

VAT is a tax charged on goods used in the EU, so if goods are exported outside the EU, VAT isn’t charged.You can zero-rate the sale provided you get and keep evidence of the export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence, within three months from the time of sale.

This line clinches it in that sense:

You mustn’t zero-rate sales if your customer asks for them to be delivered to a UK address.

So, as far as I understand it:

Billing in the UK, Shipping in the EU (non-VAT registered recipient) = you charge VAT
Billing in the UK, Shipping in the EU (VAT Registered recipient) = you don’t charge VAT
Billing in the EU, Shipping in the EU (non-VAT registered recipient) = you charge VAT
Billing in the EU, Shipping in the EU (VAT Registered recipient) = you don’t charge VAT
Billing in the EU, Shipping outside the EU = you don’t charge VAT
Billing outside the EU, Shipping in the EU - you charge VAT

Channel Islands aren’t a EU Member State.

So basically, the important part is whether the goods you ship are being “removed” from the EU. If yes, no VAT. If they travel between EU member states, there is VAT (unless recipient is VAT regged).

It’s not to do with the billing, but with the shipping.

 
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J_T_
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Ross - 13 August 2008 06:44 AM

What about for EU (non-UK) locations?  Does Magento calculate the tax correctly there?

The Taxation rules cover that. You just need to add the right rule along with the correct VAT rates.

The only thing I’m not sure about yet is whether or not Magento allows for EU customers to enter their VAT number and therefore claim zero-rated VAT. Other than that, from what I’ve seen, it can handle whatever situation you throw at it.

 
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insight
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Hi guys,

I’m trying to tackle this tax issue for the uk, from my work so far i believe that magento can handle the VAT rules for the uk. having said that i have come across something which is probably me just being a dumbass:

I have the rules set up with three VAT rates:

exempt - 0 rate
reduced - 5%
standard - 17.5%

This is all set up with the product classes and customer classes etc, however when i add a product to the basket that is of standard tax rate and costs £125 it calculates tax as 18.62!!!

surely this should be 21.87??

anyone got any ideas as to why it would do that??

Plus i think it would be a good idea if all of us Brits got together here and posted the ultimate guide to how to configure magento to handle vat etc. Should we start a wiki so we can all contribute???

 
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insight
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ok ignore my last post i was being an idiot!!

of course that is correct 106.38 + 17.5% = 125

ok

still think the wiki is a good idea though as this does seem to be the biggest issue with having a uk magento store at the moment

 
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J_T_
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LOL, welcome to tax calculations, yes 18.617 is correct.

When I have my setup ready, I’ll post my rules.

 
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insight
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hey man,

i have tax sorted now for england and ireland and the channel islands, i’ll email my rules over if you want??

Pete

 
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furman
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Hi,
What is the status of the UK Tax issue?  I have downloaded Magento and I want to start working with it.

 
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