ChannelEngine: VAT settings

About this article

This article describes how to configure VAT settings on ChannelEngine to calculate VAT on incoming orders.

Table of contents

Introduction

Enable VAT calculations

View VAT calculations

• On ChannelEngine
• Via the Merchant API

Example VAT calculation

Manually calculate VAT

Create VAT rate exceptions

Show local VAT number on invoices

Introduction

Marketplaces expect your prices to include value-added tax (VAT). Therefore, orders coming from marketplaces also have order and order line totals, including VAT.

Some marketplaces, such as Amazon and Reverb, can automatically calculate the sales tax/VAT that is related to an order, withhold the amount due, and report it to the relevant tax authority. Most marketplaces, however, do not calculate sales taxes/VAT due to country-specific differences. VAT calculations are left to the merchant to manage. 

ChannelEngine offers merchants the option to automatically calculate VAT on incoming orders. To enable ChannelEngine to calculate VAT, add your VAT number(s) to your ChannelEngine account. Alternatively, set up a custom VAT rate.

Enable VAT calculations

ChannelEngine maintains a fixed list of countries and their related VAT rates. It is possible to enable a VAT calculation on orders that are delivered within those countries by providing your VAT numbers that apply to those countries. 

To enable VAT calculations on your incoming orders:

1. Go to Settings, VAT rate settings from the sidebar menu.

2. Click Edit (the pencil icon) at the end of the line item of the given country where you want to enable VAT calculations.

   

3. In the pop-up, enter your VAT number in the VAT number field. 
4. ChannelEngine validates international VAT numbers using the VAT Information Exchange System (VIES). 

5. To enable the VAT calculation in the given country, toggle the Enable VAT rule setting on.
6. Click Save.
7. If the VAT number is correct according to the VIES, you see a confirmation message.
8. In the VAT rate settings overview, your VAT calculation is set to active, indicated by a green checkmark.
9. Repeat steps 1-6 for any additional countries for which you have a VAT number, and for which you need to calculate the VAT.
10. ChannelEngine calculates the VAT on new orders that come into ChannelEngine after the moment when you enable the VAT calculation. 
    • The VAT calculation appears on the order, on both the web interface and in the API response of the order. 
    • Existing orders for the given country are unaffected.

View VAT calculations

ChannelEngine shows order sales both inclusive and exclusive of sales tax/VAT. Access the calculated VAT fields via the Merchant API or the Order details page. 

On ChannelEngine

In Order details, toggle the VAT calculation on and off by clicking Show/Hide VAT and commission.

In Order details, Extra information, refer to the VAT_CALCULATION_METHOD_KEY field on the order level to determine which method ChannelEngine used to calculate VAT on the order. The following values are available for this field:

• FROM_PRICE_INCL - ChannelEngine calculates sales tax/VAT using the provided OriginalUnitPriceInclVat and sales tax/VAT rates configured in VAT rate settings on ChannelEngine.
• FROM_PRICE_EXCL - ChannelEngine calculates sales tax/VAT using the provided OriginalUnitPriceExclVat and sales tax/VAT rates configured in VAT rate settings on ChannelEngine.
• FROM_VAT_RATE - (used in conjunction with Amazon's VAT Calculation Service, VCS) ChannelEngine calculates sales tax/VAT using either the marketplace-provided VatRate or PriceInclVat in combination with the VatAmount provided by the marketplace.
• NO_CALCULATION - ChannelEngine does not calculate sales tax/VAT. Instead, it relies on the exact VAT amounts provided by the marketplace. This is a typical scenario for North American marketplaces, which are required to provide exact VAT amounts on orders; these marketplaces are legally responsible for tax calculation, collection, and remittance.

Via the Merchant API

In the order response, fields that are calculated with VAT contain InclVat in their names. Each amount is available in the original currency of the order and in the default currency of your ChannelEngine environment:

• A field that contains Original in its name shows values in the original currency of the order,  e.g.: PLN for an Allegro order.
• Other fields appear in the currency of your environment, e.g.: EUR if ChannelEngine has set up your environment in euros.

If the original currency and your default currency of your environment are the same, the orders fields match.

Example: API response on an incoming order, prices including and excluding sales tax/VAT

      "SubTotalInclVat": 112.5,
          "SubTotalVat": 17.96,
          "ShippingCostsVat": 0,
          "TotalInclVat": 112.5,
          "TotalVat": 17.96,
          "OriginalSubTotalInclVat": 112.5,
          "OriginalSubTotalVat": 17.96,
          "OriginalShippingCostsInclVat": 0,
          "OriginalShippingCostsVat": 0,
          "OriginalTotalInclVat": 112.5,
          "OriginalTotalVat": 17.96,
          "SubTotalExclVat": 94.54,
          "TotalExclVat": 94.54,
          "ShippingCostsExclVat": 0,
          "OriginalSubTotalExclVat": 94.54,
          "OriginalShippingCostsExclVat": 0,
          "OriginalTotalExclVat": 94.54,
          "Lines": [
          {
            "Id": 167650,
            "ChannelOrderLineNo": "17451169495691",
            "Status": "IN_PROGRESS",
            "IsFulfillmentByMarketplace": false,
            "Gtin": "1234567891011",
            "Description": "Furmidable cat tree",
            "StockLocation": {
              "Id": 1,
              "Name": "turbo.nl"
            },
            "UnitVat": 17.96,
            "LineTotalInclVat": 112.5,
            "LineVat": 17.96,
            "OriginalUnitPriceInclVat": 112.5,
            "OriginalUnitVat": 17.96,
            "OriginalLineTotalInclVat": 112.5,
            "OriginalLineVat": 17.96,
            "OriginalFeeFixed": 0,
            "BundleProductMerchantProductNo": null,
            "JurisCode": null,
            "JurisName": null,
            "VatRate": 19,
            "UnitPriceExclVat": 94.54,
            "LineTotalExclVat": 94.54,
            "OriginalUnitPriceExclVat": 94.54,
            "OriginalLineTotalExclVat": 94.54,
            ...
            }
            ]

Example VAT calculation

In the order response, the fields that ChannelEngine calculates depend on the VAT_CALCULATION_METHOD_KEY. If ChannelEngine calculates VAT on the order, then you see the calculated values in the order response. 

Given:

"LineTotalInclVat": 112.5,
"VatRate": 19,
"LineVat": 17.96,
"LineTotalExclVat": 94.54

The calculation is:

112.50/1.19 = 94.54

112.50−94.54 = 17.96

So in this example, ChannelEngine calculated the following values:

• LineVat = 17.96
• UnitVat = 17.96
• LineTotalExclVat = 94.54
• UnitPriceExclVat = 94.54
• and the related order totals like SubTotalVat, TotalVat, SubTotalExclVat, and TotalExclVat.

Manually calculate VAT 

It is not mandatory to use ChannelEngine's VAT calculation. Because ChannelEngine is limited to the data that it receives via its integrations with your connected channels, it cannot determine if more VAT applies elsewhere in your supply chain or if you exceed the VAT threshold in your country or region. 

If you use a third-party logistics provider, e.g.: a multi-channel fulfillment (MCF) provider or a marketplace fulfillment service, that is located outside of your main country, you can incur complex cross-border tracking scenarios. Cross-border scenarios require various registration, reporting, and remittance obligations from the point of dispatch to the final sale, for which you might want to calculate the VAT outside of ChannelEngine.

If you need precise VAT compliance, use the data from the incoming order to perform the calculations yourself (or via your accounting software), since only you have the full view of your total sales across all channels. 

To calculate VAT yourself:

• Use the Original order fields, i.e.: without the currency conversion.
• Use the order fields that contain ExclVat, i.e.: without the VAT calculation.

In the order response, the original fields appear with the prefix Original.

Original fields

Cross-border VAT compliance

The European Union (EU) enforces a single, EU-wide VAT threshold of EUR 10,000 per calendar year instead of a per-country threshold system. Below this threshold, the distance sales of goods within the EU remain subject to VAT in the member state where the taxable person is established. (Note that this threshold applies solely to sales to end consumers (B2C), not to other businesses (B2B).)

To track whether you have exceeded the EU-wide threshold, use the data from your incoming orders. ChannelEngine does not monitor whether your sales exceed this threshold. 

Create VAT rate exceptions

Set up custom VAT rates to define VAT rate exceptions for specific products or families of products that do not fall under your VAT country's standard rates, e.g.: children's car safety seats in the Republic of Ireland.

To add a custom VAT rate:

1. Go to Settings, VAT rate settings from the sidebar menu. 
2. Select the Custom VAT tab.
3. You are presented with an overview of your previously created custom VAT rates, if any. To add a new custom VAT rate, click Add.
4. Enter a name for the custom VAT rate.
5. Add a VAT rate, without the percentage symbol. E.g.: '10'.
6. Add one or more countries in which the custom VAT rate applies. Only orders from those countries have their VAT overridden by the custom VAT rate you set.
7. Select the products to which the custom rate applies via advanced filters or by manually searching for specific products.
8. Click Save.

Show local VAT number on invoices

Your local VAT number is not automatically displayed on the invoices that ChannelEngine generates for you because it is not possible to enter your local VAT number in the VAT number field in VAT rate settings. 

Manually add your local VAT number to your invoice template at Invoice settings.