Tax settings for the Netherlands

anilobmit
Tourist
14 0 1

 

Hi all,

I am experiencing problems setting up the TAX system in Shopify.

Netherlands requires a 21% TAX rate and include TAX in your product prices.

I currently have "All taxes are included in my prices" checked, but of course when I enter a 21% TAX rate the numbers don't make sense. Is there a way to change the formula Shopify uses tax = ( tax rate * price ) / ( 1 + tax rate ) to just tax = ( tax rate * price )

I don't understand in the first place why it is calculated like that.

Other than that, I found out I have to uncheck the box "All taxes are included in my prices" and edit all product price settings, what I found here: https://help.shopify.com/en/themes/customization/products/show-vat-prices?ref=sufio

Problem is that for example I don't have a "product-grid-item.liquid". Or I can't find this anywhere.

{{ product.price | money }}

What would you recommend me to do? 

I need to show all product prices including a 21% tax rate. When a customer checks out they pay for example €10,00 that includes €2,10 tax. Shipping costs include tax also.

I find this very confusing, should be an easy way to solve this.

Thank you!

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Don
Shopify Staff
Shopify Staff
1388 92 190

Hi there Tim!

Don here from Shopify. :)

I can confirm that the way that taxes included in prices is working as intended and hopefully clarify why it needs to be calculated in this fashion.

Taking your example of a product priced €10; if this is inclusive of 21% tax then the product price plus tax equals €10, meaning the amount being taxed at 21% is not the full €10.

If your product price is actually €10 then taxing this at 21% would add €2.10 for a total price with tax of €12.10.

If instead, the total price with tax is €10 then the 21% is not reckoned against €10 because this is the price inclusive of tax already; so you would be calculating and charging tax on the tax!

In the example used here a total price of €10 includes 
a product price of €8.26 and VAT at 21% of €1.74 for the total of €10.

You can check this out yourself using any free VAT calculator tool online to see what effective price a product including VAT would work out as.

As for the VAT customisation guide you are referring to here; this is actually an unsupported customisation (as we can see at the top of that guide) as it falls outside of the scope our support team can offer at the moment.

That just means that we can't offer support for implementing this from here, though there are still plenty of options available.

Hopefully, a fellow member of our community here will be able to share their experience with putting that in place or if not you can always hire a Shopify Expert to help put this in place.

There are some Experts like HeyCarson or TaskHusky who specialise in smaller, theme-related tasks that you might like to check out.

I trust that the way inclusive taxation works here is at least a little clearer and you have some ways forward here for your needs. :)

All the best!

Regards,
Don

Don | Social Care @ Shopify 
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Nevil_Hulspas
Tourist
10 0 2

I'm also from The Netherlands. Shopify's tax system is totally illogical and maybe even non-compliant in terms of EU tax law. It's very strange how shopify decided to implement this. A collection to link a tax rate to a product? Why not just a seperate tax rate field? 

Aside from the suboptimal UI/UX for taxes, shopify doesn't even provide an out of the box solution to correctly display the taxes on an order. It does calculate the correct taxes in total, but it doesn't display which tax rate is applied to which product. Product tax rates are normal in the EU, probably not so much in north america. 

When creating a draft order with "custom items", no tax rate can be applied to those products, only to the total order. But since custom items don't have a tax rate linked to them, no tax can be applied to them individually. 

In terms of the 'VAT customisation guide' I've tried this, and this didn't work out too well. The prices we decided to input into shopify were excluding tax, we then changed the settings to uncheck "All taxes are included in my prices". A developer then changed all the code to multiply the product prices times the tax rate, to display the correct tax rate. So far so good, and it seemed to work on the website. Only to discover that on the checkout page, the product prices were shown without taxes, while on the website the prices were shown including taxes. The total price was correct, only the product price was different for the customer, so they probably were like: "wasn't this product €12,10 when I added it to cart? Now it's €10 all of a sudden."

Also when we want to sell orders to other businesses within the EU, we are not allowed by the EU to charge taxes to those customers. Simply checking the field "customer is tax exempt" doesn't work because the product prices remain the same. Only tax part on the checkout is removed, but the total amount in euro's stays the same. This is assuming we entered the prices in shopify to include taxes, and have "All taxes are included in my prices" checked. 

All in all, there is nothing I know of that can be done at this point. It probably need a whole restructuring of the core parts of how shopify does taxes, and I'm not really hopeful they understand this. Hopefully more EU customer will start complaining and they would do something about this. 

Feel free to contact me for more clarifcation, because I really want this solved. It's hindering my business to grow. 

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anilobmit
Tourist
14 0 1

Hi Nevil,

I agree that it's really weird to calculate tax like this. But I guess that's the difference between US/EU.

What helped for me is keep my settings the same, but I put the tax rate for NL and BE to 26.583%. This means that eventually it will display it for customers the correct way of "21%". When you put 26,583% tax rate for the EU regions, it means a €10,00 product has €2,10 tax. :)

You just need to make sure that the 26,583% is displayed as 21% on your website. This did the trick for me.

If you have any questions please let me know.

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smartywak
Shopify Partner
7 0 0

I'm currently looking into designing some solutions for our EU friends at the moment. It can definitely be a pain this tax thing. Thanks for sharing your problems in great detail, I'll keep you all posted at things get clear.

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