Tax/VAT Rates for Different Customers

If your customers are active in different states, provinces, or countries, your goods may fall under different taxation rules. To create VAT or Sales Tax rules, go to Settings >Sales Tax on your Admin Dashboard. There are five steps to creating a VAT/Sales Tax rule, as follows:

Step 1. Create a new VAT/Sales Tax rate. 

Step 2. Create a new VAT/Sales Tax customer group. 

Step 3. Create a new VAT/Sales Tax class. 

Step 4. Create a new VAT/Sales Tax rule. 

Step 5. Assign a VAT/Sales Tax group to your customers.

When you assign a VAT/Sales Tax group to your customers, their VAT/Sales Tax will be calculated based on the corresponding rate.

Keep in mind that: 

• VAT/Sales Tax rates are the costs (in percentage) added as tax to a customer's order during checkout. VAT/Sales Tax rates depend on the countries your company is active in and the taxation that applies to certain goods and services in each of these countries.

• VAT/Sales Tax customer groups are the tax groups you assign to your customers. For example, you can assign your customers in France to a different customer group than your customers in the UK because different taxes apply to goods and services in these two countries.

• VAT/Sales Tax classes have to do with the tax category product falls into, meaning if a product is taxable, non-taxable, or if a reduced tax is applied to it. For example, in certain countries, alcoholic beverages may be taxed under a standard VAT/Sales Tax rate, baked goods may enjoy a reduced rate, and antiques and works of art may be exempt from VAT/Sales Tax altogether.

• VAT/Sales Tax rules combine the previous three parameters to create a single tax setting. These rules are calculated based on the VAT/Sales Tax rate, the VAT/Sales Tax customer group, and the VAT/Sales Tax class. For example, you may want to create a VAT rule for your customers in the UK who buy baked goods from your business. This rule will be calculated on the tax rate (the VAT/Sales Tax rate) that applies to baked goods (the VAT/Sales Tax class) in the UK (the VAT/Sales Tax customer group).

NOTE: If you have integrated B2B Wave with your accounting systems (e.g., QuickBooks Online, Xero), the “Integration Reference” field will  also appear on this page. Remember to choose the VAT/Sales Tax rule that applies from the drop-down menu. 

Assigning a VAT/Sales Group to Your Customers

You can set a tax rate for your customers by assigning them to a sales tax/VAT group. You can do this using the “Sales Tax/VAT group” field in the “Customer details” tab when you create/edit a customer.

In the example below, we applied the “Sales Tax applies” to the customer Demo Coffee. The screenshot above shows that the first Sales tax/VAT rule contains the “Sales Tax applies” group, which is a 7.25% tax rate. Because this tax group has been applied to Demo Coffee, their orders will now be charged a 7.25% tax rate.

NOTE: If you have any questions about setting up taxes in your B2B portal, please contact our support team.