ChannelEngine: VAT settings

About this article

This article describes the usage of VAT settings within ChannelEngine.

Table of contents

Introduction

Cross-border VAT

VAT settings on ChannelEngine

Custom VAT settings

VAT calculation logic

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 related to an order, withhold the amount due, and report it to the relevant tax authority. Most marketplaces, however, do not provide the calculation, leaving this matter entirely to the merchant. 

ChannelEngine offers the option to calculate the VAT on orders, however, this requires you to add your VAT number to your ChannelEngine account – where applicable.

Cross-border VAT

On 1 July 2021, the European Union (EU) replaced the previous per-country threshold system with a single, EU-wide threshold of EUR 10,000. 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 this threshold applies solely to sales to end consumers (B2C), not to other businesses (B2B).

VAT settings on ChannelEngine

1. To add your VAT number to ChannelEngine, select Settings, VAT rate settings.
2. Select Edit (the pencil icon) on the right-hand side for every country you wish to add a VAT number to.
3. Enter your VAT number, select Enable VAT rule, and select Save.
   NB: ChannelEngine validates international VAT numbers using the VAT Information Exchange System (VIES). However, some countries (e.g.: Germany and Spain) also have local VAT numbers. Those cannot be verified – and result in an error when you try to save related changes on ChannelEngine.
4. If the VAT number is correct according to the VIES, you see a confirmation message and the VAT information.
5. In the overview, you can see the VAT number accompanied by a green checkmark.
6. Repeat this step for any additional countries you have a VAT number for – and need to have the VAT calculated for.
7. Note that the VAT calculation only applies to new orders, not to existing orders. ChannelEngine never edits existing orders.

It is not mandatory to use ChannelEngine's VAT calculation. As ChannelEngine only has insight into the total sales via connected marketplaces, it cannot determine with certainty if the threshold has been reached or not. If you want to use your own VAT calculations, you can use the original fields from ChannelEngine, which contain the exact order values as they have been received by the marketplace (i.e.: without any VAT calculation or currency conversion). Below is an example of a return via ChannelEngine's merchant API:

"SubTotalInclVat": 49.99,
      "SubTotalVat": 8.68,
      "ShippingCostsVat": 0,
      "TotalInclVat": 49.99,
      "TotalVat": 8.68,
      "OriginalSubTotalInclVat": 49.99,
      "OriginalSubTotalVat": 8.68,
      "OriginalShippingCostsInclVat": 0,
      "OriginalShippingCostsVat": 0,
      "OriginalTotalInclVat": 49.99,
      "OriginalTotalVat": 8.68,
      "Lines": [
        {
          "Status": "IN_PROGRESS",
          "IsFulfillmentByMarketplace": false,
          "MerchantProductNo": "269-703-60",
          "Gtin": "4251234428221",
          "UnitVat": 8.68,
          "LineTotalInclVat": 49.99,
          "LineVat": 8.68,
          "OriginalUnitPriceInclVat": 49.99,
          "OriginalUnitVat": 8.68,
          "OriginalLineTotalInclVat": 49.99,
          "OriginalLineVat": 8.68,
          "BundleProductMerchantProductNo": null,
          "ChannelProductNo": "2300786794",
          "Quantity": 1,
          "CancellationRequestedQuantity": 0,
          "UnitPriceInclVat": 49.99,
          "FeeFixed": 7.5,
          "FeeRate": 0,
          "Condition": "NEW"
        }

Custom VAT settings

If you sell products that do not fall under your VAT country's standard rates, such as children's car safety seats in the Republic of Ireland, you can set a custom VAT rate on ChannelEngine.

To add a custom VAT rate, do the following:

1. Go to VAT settings, Custom VAT. You are presented with an overview of your existing custom VAT rates if any. Click Add.
2. Enter a name for the custom VAT rate.
3. Add a VAT rate, without the percentage symbol. E.g.: 10.
4. 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.
5. Select the products to which the custom rate applies under the Select products area, using the same rule-based system found in the product selection and categorization sections. Once your rules are defined, you can check the full list of products to which it applies under the Products area.
6. Click Save.

VAT calculation logic

Most marketplaces do not calculate sales taxes/VAT due to country-specific differences. To provide you with a sales tax value, ChannelEngine has a mechanism that guarantees costs, both inclusive and exclusive of sales tax/VAT, are always available.

ChannelEngine handles the calculation – enabling you to access the required fields via the Merchant API or the Order details page. To achieve this, you must set up the automatic sales tax/VAT calculation on ChannelEngine by navigating to Settings, VAT rate settings.

Prices including and excluding sales tax/VAT on the Order details page.

To see the sales tax/VAT fields via the Merchant API, refer to the VAT_CALCULATION_METHOD_KEY field on the order level. The following values are available for this field:

• FROM_PRICE_INCL - calculates sales tax/VAT using the provided OriginalUnitPriceInclVat and sales tax/VAT rates configured in VAT rate settings on ChannelEngine.
• FROM_PRICE_EXCL - calculates sales tax/VAT using the provided OriginalUnitPriceExclVat and sales tax/VAT rates configured in VAT rate settings on ChannelEngine.
• FROM_VAT_RATE - calculates sales tax/VAT using either the VatRate or PriceInclVat in combination with the VatAmount provided by the marketplace.
• NO_CALCULATION - does not calculate sales tax/VAT. Instead, it relies on the exact VAT amounts provided by the marketplace. This is required in North America, where marketplaces are legally responsible for tax calculation, collection, and remittance.

      "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,

Prices including and excluding sales tax/VAT in the API response.