Line tax:

Channel orders

• Some channel integrations (e.g. Magento 1 and Magento 2, Shopify) have a Use channel tax settings option which enables to use the tax values to the order on the channel directly. If this setting is enabled, the tax values on the order in Linnworks will match the channel. 

Please see the respective channel integration documentation for the available configuration settings from the list here.

• If the channel integration does not have this option or when the setting is disabled, then the logic used depends heavily on the channel integration or the marketplace region:
  • In the case of e.g. Magento 1 and 2 which offer numerous settings on the backend for settings. Linnworks will do back calculations on orders depending on the values the channel sends in with the XML (Open Orders > View Order > Properties > Order XML).
  • In the case of e.g. Amazon US, the channel will tell Linnworks that the prices are tax exclusive as is the usual norm for US marketplaces, while for Amazon UK the product prices are generally inclusive of tax.

For cases where the normal practice is that the prices are inclusive of tax, the below calculations are used:

Line Total = Unit Cost * Quantity

Line Tax = Line Total - (Line Total / (1 + Tax Rate)° 

Each (Ex Tax) = Unit Cost / (1 + Tax Rate)° 

Example:

Product A
Quantity: 1
Unit Cost: £5.00
Tax Rate: 20%
Line Total: 5.00 * 1 = £5.00
Line Tax: 5.00 - (5.00 / 1.2) = £0.83
Each (Ex Tax): 5.00 / 1.2 = £4.17

For cases where the channel informs Linnworks that the prices are tax exclusive, please see the example below for Direct Orders with Direct orders tax is inclusive of the item price setting unticked.

Direct Orders

Direct Order unit costs can either be inclusive or exclusive of tax. This depends on your system settings under Settings > General Settings > General > Default tax settings > Direct orders tax is inclusive of the item price.

• When ticked, the line totals will be calculated in the same method as for channel orders with tax inclusive prices in the example above.
• When unticked, they will be calculated as below:

Line Total = Unit Cost * Quantity * (1 + Tax Rate)° 

Line Tax = Unit Cost * Quantity * Tax Rate

Example:

Product A
Quantity: 1
Unit Cost: £5.00
Tax Rate: 20%
Line Total: 5.00 * 1 * 1.2 = £6.00
Line Tax:  5.00 * 1 * 0.2 = £1.00
Each (Ex Tax): £5.00

The shipping tax is calculated based on the order destination country and the tax rate is taken from the Countries list (Settings > General Settings > Default Settings > Manage Countries).

The Shipping under Totals on an order displays shipping cost excluding tax. Calculated tax is then added to the Tax line under Totals.

Shipping = Shipping Cost / (1 + Tax Rate)° 

Shipping Tax = Shipping Cost - Shipping

Example

• Order destination country is Belgium.
• Belgium Tax Rate is specified as 21% in the Countries list.
  
  

Discount:

The order discount is calculated backwards from the line total after removing the tax. This is the most accurate way of calculating accurate discount rates.

Example: