Tradebox can deal with VAT differently per channel, depending on your requirements. First, you should make sure all the correct tax rates have been set up within the program in the Configuration > Tax Rates section. By default, there are five generic tax rates, as well as a tax rate per country for all countries within the EU, but these can be added to or amended depending on your needs. The five generic tax rates are:
- Zero Rated (0%)
- Standard Rated (20%)
- EU B2B Sales (0%)
- Non Vatable (0%)
- Reduced Rate (5%)
Once you have all of the relevant tax codes set up, to allocate those within a channel you would double click on the channel in the list and select the VAT tab. The tax codes set here are defaults per region, and can be overwritten by other factors such as product tax code or country tax code.
VAT rates in the channel VAT table relate to income from:
And are split into sales from:
- Rest of World (ROW)
Default Tax code settings are dependent upon whether the company is VAT registered or not, which is covered during the setup of the software. For VAT registered businesses the default tax codes are:
- UK = Standard Rated
- Rest of World (ROW) = Zero Rated
For businesses that are not VAT registered the default settings are:
- UK = Non Vatable
- Rest of World (ROW) = Non Vatable
Use Product Tax For Carriage is used if you are selling goods with a mixture of tax codes and you want the carriage to reflect the product tax. With this setting turned on, if all of the products on an order are non-vatable, then no VAT will be applied to the carriage. If any product on the order is standard rated then the carriage will also be standard rated, even if the majority of the products are non-vatable.
Use Single Tax Code for All Entries allows you to set a specific tax code for all entries that go through this channel. This overrides any other rules.
EU VAT Calculation Method determines how VAT will be handled on sales being shipped to the EU. The four options are as follows:
1. Remove Destination VAT - Zero Rate: When this option is selected, the behaviour varies depending on the channel type. For Amazon, eBay and CSV channel types, it will deduct the VAT from the gross amount based on the standard rate of the country the order is being shipped to, or the product tax for that country, and only download the net value. For all other channel types, it will simply zero rate the full total from the website.
2. Calculate Destination VAT on orders less than €150: To be used where you are liable for VAT on EU orders up to a value of €150. This will instruct Tradebox to check the tax rates you have applied against each EU country in Configuration > Countries within Tradebox. The tax rate will be determined based on the standard rate of the country the order is being shipped to, or the product tax for that country.
3. Calculate Destination VAT on All Orders: This is used if you are liable for VAT on all EU orders, regardless of their value. The tax rate will be determined based on the standard rate of the country the order is being shipped to, or the product tax for that country.
4. Zero Rate Gross Value: With this option, Tradebox simply takes the total value from the website and applies a zero rate tax code to it. When this option is selected, a secondary option becomes available which allows you to choose which of your zero rated tax codes you want to use for these sales.
If you are VAT registered in any countries other than the UK or for IOSS, you may need to apply a tax rate at the country level. Please click here for our guide on country specific VAT.
If you have integrated Tradebox with an accounts package, your Tradebox tax codes will need to be mapped to the relevant tax codes in your accounts package. This would be done by opening the channel, selecting Sage 50 or Xero > Tax Rates.