How line tax is calculated

Channel/Website Orders


For channel/website orders each line is calculated presuming that the product prices are inclusive of tax.


Product A


Line Total = £5


Tax Rate = 20%


Line Tax = 5 - (5/1.2) = 0.83


Line Total (Ex Tax) =  5 - 0.83 = 4.17



Direct Orders


Direct Order unit costs can either be inclusive or exclusive of tax.


The option can be found in Settings > Application Settings


"Direct Orders - tax is inclusive of the item price"


If ticked then the Line totals will be calculated in the same method
as Channel/Website Orders, else it will be calculated in the following
fashion.


Product A


Line Total = £5


Tax Rate = 20%


Line Tax = (5*1.2)-5 = 1


Line Total (Ex Tax) = 5


How Linnworks gets the Tax Rate for each product - Direct Orders


Linnworks gets the tax rate based on the location of the order (where
it was placed), the items default tax rate and the country of the
order.


Scenario 1


Current Location = United Kingdom


Customers Country = United Kingdom


UK tax rate = 20%


When Product A is added to the an order the Tax rate will be 20%.


Scenario 2


Current Location = United Kingdom


Customer Country = United States


US tax rate = 10%


When Product A is added to the order the Tax Rate will be 10%

Scenario 3


Product B has a set tax rate instead of the taking the default one for each order.


Product B Tax Rate = 5%


When the product is added to the order the Tax Rate will be 5% regardless of Location or Customers country.



How postage tax is calculated


The tax on postage is calculated based on the customers country.


Example


Customers Country  = United Kingdom


UK tax rate  = 20%


Postage cost (ex tax) = 2.99


Postage tax = 0.50



How Discount is calculated


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


Example


Discount = 5%


Line Total = £10


Tax Rate = 20%


10/1.2 = 8.33


8.33-(8.33*0.05) = 7.91


7.91*1.2 = 9.50



How Subtotal is calculated


Order subtotal is calculated based on all the Line costs (ex. tax) excluding the tax for postage.


How the orders total tax is calculated


The total tax for the order is calculated by the addition of each lines tax plus the tax for the postage.



How Order Total is calculated


The order total is a simple calculation of Subtotal + Postage Cost (ex Vat) + Total Order Tax.