Tax/VAT Rates for different customers
Create VAT or Sales Tax rules
First, go to the Settings->VAT menu in your Admin Dashboard. If your company operates out of the US, this menu will be labelled Settings->Sales Tax.There are five steps to creating a VAT/Sales Tax rule, as follows:
- Create a new VAT/Sales Tax rate.
- Create a new VAT/Sales Tax customer group.
- Create a new VAT/Sales Tax class.
- Create a new VAT/Sales Tax rule.
- Assign a VAT/Sales Tax group to your customers.
Customers that are assigned to each VAT/Sales Tax group will have their VAT/Sales Tax 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 are dependant on the countries in which your company is active as well as the taxation that is applied to certain goods and services within each of those countries.
- VAT/Sales Tax customer groups are the tax groups your customers are assigned to. For example, you can assign your customers in France to a different customer group than your customers who are in the UK because different taxes are applied to goods and services in these two countries.
- VAT/Sales Tax classes have to do with the tax category under which a product falls, 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, while 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 on the basis of 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 VAT rule will be calculated on the sales tax (the VAT rate) that applies to baked goods (the VAT class) in the UK (the VAT customer group).
Assign a VAT/Sales Group to your customers
In order to apply a tax rate to a customer, you need to assign them to a sales tax group. You can do this using the "Sales Tax group" field found in the 'Customer details' tab when you are creating/editing a customer.
In the example below, we applied Sales Tax CA to the customer "Santa Clara Company". In the screenshot above, you can see that the first Sales Tax rule contains the Sales Tax CA group, which is specified as a 20% tax rate. Because this tax group has been applied to Santa Clara Company, their orders will now be charged a 20% tax. If you have any questions about setting up taxes in your B2B portal, please contact our support team.