Woo Commerce: Change VAT calculation from net to gross price
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Hi,
We are running a bookshop located in Vienna.
In accordance with EU tax regulations, we are required to adjust our tax calculation policy. Currently, we calculate taxes based on the location of our shop (Vienna). Now, we have to change calculating taxes based on the shipping destination of the customer.
This change presents a challenge due to varying tax rates across different countries; for instance, Austria imposes a tax rate of 10%, while Germany’s rate is 7%. Consequently, a customer from Germany could purchase a book from our shop at a lower price compared to an Austrian customer. This is against to our policy that our books have the same price in both Germany and Austria.
The root of this issue lies in WooCommerce’s method of tax calculation, which begins with the net price. This is basically the right way, but in Germany and Austria we have a fixed gross sales price for books and therefore operate differently.
My question: is it feasible to adjust the calculation method to start from the gross price?Thanks for help!
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Hi Robert!
Thank you reaching out.
The root of this issue lies in WooCommerce’s method of tax calculation, which begins with the net price. This is basically the right way, but in Germany and Austria we have a fixed gross sales price for books and therefore operate differently.
My question: is it feasible to adjust the calculation method to start from the gross price?
I understand you want to maintain the same product prices for Austria and Germany but charge different taxes for each country; is my understanding correct?
If it is, you can do this using the Yes, I will enter prices inclusive of tax setting and create the tax rates you need to charge for each country.
This way, customers in Germany and Austria will pay the same for a book, but the tax amount they pay is different.
Is this what you want to achieve? If it is, please go to WooCommerce > Settings > Tax > Tax options, and:
- Select the Yes, I will enter prices inclusive of tax option in the Price entered with tax section
- Select Customer shipping address in the Calculate tax based on section.
- Select the Including tax option in the Display prices in the shop and Display prices during cart and checkout sections.
- You can include a custom text to display next to the product price, like ‘VAT included’.
Once you finish, it should look something like this.
Image link: https://i.ibb.co/b7Vz9tc/abjfdnks.png
Then you can create the tax rates for each country by going to WooCommerce > Settings > Tax > Standard tax rates, then add a row for each country you need, enter the country code (enter the first two letters and select the country from the drop-down menu), and enter the tax amount you want to charge.
Once you do this, save changes, and you are good to go.
Here’s a guide on how to set up taxes if you want to explore more: https://woo.com/document/setting-up-taxes-in-woocommerce/
I hope this is helpful.
If you mean differently or have further concerns, let us know, and we will be glad to assist.
Cheers!
To achieve this, you can set up a tax inclusive pricing model. This means the price you enter for your products will be the final price your customer sees, regardless of their location. The VAT will be calculated within this price rather than added on at the end.
To set this up, go to WooCommerce > Settings > Tax > Tax Options. For “Prices Entered With Tax”, select “Yes, I will enter prices inclusive of tax”. Then, set up your tax rates for each country under the “Standard Rates” section.
More info can be found here: https://woo.com/document/setting-up-taxes-in-woocommerce/#prices-entered-with-tax
I hope this helps! If you have further questions, feel free to ask.
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