EU and other merchants can use cross-border price consistency to offer customers the same price across different tax zones.
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Note: This article provides information about how to set up tax calculations in Magento Community Edition (CE) and Enterprise Edition (EE). The information is based on CE 1.9 and EE 1.14 and later versions; some options here might not apply to earlier versions.
Important: No guarantee is offered with respect to any of the information given here. Please contact an expert before you take any decisions about tax matters.
Cross-border trade (also referred to as price consistency) supports European Union (EU) and other merchants who want to maintain consistent prices for customers whose tax rates are different than the store tax rate.
Merchants operating across regions and geographies can show their customers a single price. Pricing is clean and uncluttered regardless of tax structures and rates that vary from country to country.
Note: To use this feature, your store must display prices including tax. (Configure this setting in the Admin panel at System > Configuration > Sales > Tax > Calculation Settings, Catalog Prices set to “Including Tax.”)
Enable Cross-Border Price Consistency
Important: If you enable cross-border trade your profit margin changes by tax rate. Profit is determined by the formula: (Revenue - CustomerVAT - CostOfGoodsSold).
To enable cross-border price consistency:
- On the Admin menu, select System > Configuration.
- In the panel on the left, under Sales, select Tax.
- Click to expand the Calculation Settings section. To enable cross-border price consistency, set Enable Cross Border Trade to “Yes.”
- When complete, click the Save Config button.
For More Information
- For an overview of the tax setup process, and links to articles that detail all the steps in the process, see Understanding How to Set Up Taxes in Magento (CE 1.8/EE 1.13 & Later)(Four-Part Series).
- Specifically, see Part 2 of the tax setup topic series: Magento Tax Setup, Step 2: Configure General Sales Tax Options (CE 1.8/EE 1.13 & Later)