Some customers (companies, or nonprofit organizations), can be exempt from taxes. You can mark such buyers as non-taxable, so that they could check out in your store without taxes applied to their orders.
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Asking for the company's name in the checkout
You can enable this setting in your Store Manager → Settings → General → Cart & Checkout.
Scroll down to the Checkout settings section and enable the Ask for the company name option. Don't forget to save the changes.
Marking customers as tax-exempt
In order to exempt a customer from paying taxes in your store, you should mark them as non-taxable in your store settings by following the steps below:
1. From your Store Manager, go to My Sales → Customers.
2. Find the customer on the list by name or email and click the pencil icon to edit the customer’s profile:
If a customer doesn't have a profile in your store yet, they can sign up themselves, or you can import their profile data.
3. Enable Tax exemption and save the changes:
That’s it. Now the customer is marked as tax-exempt and, after logging into their customer account in your store, they will pay no taxes when buying from you. The tax-exempt status may provide not only complete relief from taxes, but also reduced tax rates, or tax exemption for a certain category of goods. Currently, the store allows setting only a 0% tax rate for non-taxable customers that is automatically applied to all products in the store.
A tax-exempt customer still sees taxes at checkout
In order to get a 0% tax rate, non-taxable buyers have to sign in to your store before heading to checkout and placing an order. Otherwise, the standard taxation rules configured in the store will be applied. Such customers should be advised to log in before purchase using the correct email. You as the store owner can check this email in your store settings, My Sales → Customers.
If you have many tax-exempt customers, consider providing them with the instructions (for example, on a FAQ page) on creating an account and contacting you about tax-exempt purchases in your store.
EU taxes (VAT)
If you’re a VAT-registered business based in the European Union, you’re most likely required to pay value-added tax. You can set up your store according to the EU VAT rules:
Charge VAT to your customers.
Apply reverse charge when selling to another EU VAT registered business.
Enter prices with VAT taxes included.
Generate tax invoices.
Display your VAT ID number on tax invoices.
Charging VAT from your customers
You can use automatic tax settings to calculate the tax rates automatically based on the store and customer's location and include VAT into product prices. These tax settings use standard general sales tax rates, which are updated regularly. At checkout, the customer will be charged a proper VAT rate according to the country and regional tax rules.
To enable automatic tax rates:
1. Add your company address in your Store Manager → Settings → General → Store profile.
2. Enable automatic tax calculations in your Store Manager → Settings → Taxes & Invoices:
Once the automatic tax rates are enabled, your store will automatically charge the proper VAT amount to your customers.
Enabling VAT reverse charge
If you sell goods to another business and these goods are sent to another EU country, you do not charge VAT. The VAT rules also require you to save a customer's VAT number and make sure it’s a valid EU VAT number.
To enable VAT to reverse charge for B2B sales in your store:
1. Go to your Store Manager → Settings → Taxes & Invoices.
2. Scroll down to Settings and enable the Ask for buyers' VAT ID at checkout option:
It will add the VAT ID number field at checkout and apply the VAT reverse charge when necessary. The customer's VAT number will also be saved in the order details for your future reference.
Entering prices with VAT taxes included
In your online store, there are two possible options you can choose from to enter your prices: with taxes included (gross prices) and without taxes included (net prices). If your store is inside the EU, gross prices are a preferable setting as they already include VAT.
To choose gross prices (in case you were using net prices):
1. From your Store Manager, go to Settings → Taxes & Invoices.
2. Click Change Pricing Settings:
3. Choose I enter prices with taxes (Gross prices) and click Save.
That’s it! Now taxable customers will see all product prices and fees, such as shipping, in your store with taxes included.
Note: After you change net prices into gross prices (or vice versa), the prices in your store are not converted automatically. You will need to change them accordingly.
Generating tax invoices
You can generate tax invoices for your orders. These tax invoices are legally compliant and meet the standard invoicing requirements for the EU. There are two types of tax invoices available in your store admin: regular invoices for your sales and cancellation invoices for your refunds.
To preview an invoice that can be generated in your store, go to Settings → Taxes & Invoices → Tax invoices → Contents of tax invoice.
You can always create a tax invoice for an order in your store manager, on the page of the order in My Sales → Orders:
All the invoices that have been created for a particular order are available in the Tax invoices section on the page of this order. If needed, you can also download all the invoices for a certain time period in bulk in Settings → Taxes & Invoices → Tax invoices.
If you have some specific requirements for invoicing or if you are making invoices via a third-party system outside of your online store, you can turn off tax invoices in Settings → Taxes & Invoices.
Displaying the VAT ID on the order invoice
You can enter the taxpayer identification number of your business that is displayed on the tax invoice. To include VAT ID on the tax invoice:
1. From your Store Manager, go to Settings → Taxes & Invoices → Tax invoices → Contents of tax invoice → Customize tax invoice.
2. Enter the taxpayer identification number into the field:
Your online store automatically detects your country and will set the appropriate tax ID name (VAT Reg No, ABN, etc.). If you need another name for your tax ID, click on the Edit name link and enter another display name.
Once added, your tax registration number will appear on all tax invoices in the header.
The taxpayer registration number will also be included in the footer of all email notifications sent to your customers.