For online sales, you need to collect taxes and forward the collected amounts to the tax authorities (for example, sales taxes in the US, VAT in Europe, GST in Canada, and more). If you have already set up sales taxes in Retail POS, you can duplicate those rates for your online store.

What taxes should I set up

Taxation rules differ depending on the country where the online business is based — tax rates can depend on types of products, your business location, consumers’ location, and more. For example, merchants that sell e-goods to customers in the EU, should charge taxes on digital products.

Check with your local tax experts whether you sell taxable goods and what are the tax rates associated with them before moving forward with online sales.

There are two ways to set up taxes in your eCom store to meet your local tax laws:

• Automatic taxes. They are available for merchants in the USA, Europe, UK, Canada, Australia, New Zealand, India, South Africa, Taiwan, Singapore, Malaysia, Indonesia, Saudi Arabia, Canary Islands, Melilla, and Ceuta. Automatic taxes provide up-to-date rates across the store and can be enabled in one button click.
• Manual taxes. If automatic taxes are not available for your country or your business requires a specifically tailored taxation scheme, you can configure taxes manually.

Setting up automatic taxes

To set up automatic taxes:

1. Navigate to the Online tab → Settings → General.

2. Scroll down to the Company address section and enter your legal company address. This address is needed to calculate and apply the right tax rate to orders at checkout.

   

3. Navigate to Online → Overview → Go to eCom (E-Series) to open the eCom admin.
4. In your eCom admin, go to Settings → Taxes and click Turn on near the Automated taxes.

Once enabled, automatic taxes will determine a precise tax rate at checkout depending on where you and your customer are located and will apply tax to each order.

By default, the same standard tax rate of your store’s region applies to all products. If some of your products are taxed differently (for example, they are tax-exempt), you can change the tax rate for those products in your eCom admin.

Setting up manual taxes

You can manually configure your online store to calculate tax rates for different regions, zones, and countries. You should set up taxes manually if automatic taxes are not available for your country or if you need a complex taxation scheme tailored to your business.

The instructions below use a 10% tax for a state to illustrate the setup process.

Step 1: Add a zone

Create a destination zone for the tax rate to apply. A destination zone, or a shipping region, is a geographical area that you ship to. With zones, you can define where you sell and how much you charge for delivering orders to various customer locations.

If the same tax rate applies to several different states, you can create one zone consisting of these states and set up a tax rate for this zone.

To add a zone for the tax:

1. Navigate to Online → Overview → Go to eCom (E-Series) to open the eCom admin.

   

2. In the left-hand menu, hover over Settings, then select Taxes.
3. In the Manual section, click Manage Tax Rates.
4. Click + Add New Tax and Save.

5. Click Manage zones (global) to open the Destination Zones page.

   

6. Click + Add New Zone.

7. Click Add State, Add Country, or Add Region and add the necessary state, country, or region.

   

8. Set a clear name for the zone. For example, States with a 10% tax rate. Tax zones and destination zones are displayed on the same Zones page, so make sure to include the word "taxes" in the name of your tax zone to avoid confusing it with another shipping zone you may create. Customers won't see the name you picked for the zone.
9. Click Save.

Step 2: Add a tax rate for the zone

1. Navigate to Online → Overview → Go to eCom (E-Series) to open the eCom admin.
2. In the left-hand menu, hover over Settings, then select Taxes. If automatic taxes are enabled, make sure to toggle it off.
3. In the Manual section, click Manage Tax Rates.
4. Click + Add New Tax.
5. Enter your tax name. For example, 10% Tax. Customers will see the name you picked for the tax at checkout.
6. If the tax applies to all products, check the Enabled by default for all products option.
7. Choose whether the tax applies only to the subtotal or the subtotal and shipping.
8. Choose whether a shipping or billing address defines the zone for a customer.
9. Click Specify rates per zone. Select the zone you created in Step 1 and enter the applicable tax rate.
10. Make sure the tax is enabled and save the changes.

If you have several taxes and/or zones, repeat the steps above for each one.

Assigning product-specific rates for automatic taxes

After you enable automatic taxes, the same standard tax rate of your store’s region applies to all the products. If some of your products require non-standard rates, you can change the tax rate for them.

To change tax rate for a product:

1. From your Retail POS, go to Online and click Go to eCom.
2. In your eCom admin, go to Catalog → Products.
3. Open the product.
4. Click the Taxes tab. You will see the tax rate that is currently applied to this item.

5. Click Change tax rate for this product:

   

6. From the dropdown, choose the tax rate that applies to your product.

   For the US merchants: You can use the search to find the rate you need.
7. Save the changes.

That’s it! Now, this product will be taxed according to the tax class that you chose.

Repeat the steps for all the products that should be taxed differently in your store.

Assigning product-specific rates for manual taxes

After you manually set up all the necessary taxes for the locations you sell to, you can choose which taxes to assign to certain products in your store. By default, all the taxes are applied to all the products.

To assign tax rates to a product:

1. From your Retail POS, go to Online and click Go to eCom.
2. In your eCom admin, go to Catalog → Products.
3. Open the product.
4. Click the Taxes tab. You will see the list of tax rates that are currently active in your store.

5. Enable the tax rates that apply to this product and disable those that do not apply. If it's a non-taxable product or service, disable all the tax rates:

   

6. Save the changes.

That’s it! Now, this product will be taxed according to the tax rates that you enabled for it.

Repeat the steps for all the products that should be taxed differently in your store.

Choosing price display in eCom: with or without taxes included

This setting is available in some of the Retail POS countries. After you change net prices into gross prices (or vice versa), the prices in your eCom store will not be automatically updated. You will need to change them yourself in Retail POS.

There are two options for displaying prices in your eCom store: with taxes included (gross prices) or without taxes included (net prices). For example, if laws in your country require prices to include taxes, you can display gross prices, so taxable customers see all product prices and fees, such as shipping, with taxes included. If you use net prices, the tax is added to the net price.

To choose how prices are displayed in your eCom store:

1. Navigate to Online > Overview > Go to eCom (E-Series) to open the eCom admin.
2. In the eCom admin, go to Settings > Taxes.
3. Scroll down to Settings.

4. Click Change Pricing Settings:

   

5. Choose I enter prices with taxes (gross prices) or I enter prices without taxes (net prices).

   

6. Click Save.

Managing tax nexus locations (for US stores)

If your company has a physical presence in a US state or an economic connection to it, you must collect applicable state and local sales tax from your customers in that state. In legal terms, this connection is known as "nexus". You may have more than one nexus when selling online. Read this article for more details on the matter: https://www.taxjar.com/sales-tax/nexus 

Each state defines nexus differently, but if you have a store or office, you have sales tax nexus, and you need to charge and report tax there. However, having employees or warehouses in a state may also create a nexus; the same goes for having a certain amount of sales ("economic nexus"). If you are uncertain whether or not your business has a nexus in a certain state, you should contact that state's revenue agency or a tax professional. You can also consult the Economic Nexus State by State Chart by the Sales Tax Institute.

By default, eCom detects your nexus state from your store address specified in the Online tab > Settings > General in Retail POS. Once you have automatic taxes enabled, it will calculate tax rates accordingly. If your business is distributed over several states, meaning you have a multi-state sales tax nexus, you can set all your additional nexus addresses so that your customers are charged proper sales tax in all states.

All your outlet addresses will automatically appear in eCom as physical tax nexuses.

To set additional nexuses for your online store:

1. Navigate to Online > Overview > Go to eCom (E-Series) to open the eCom admin.
2. In the eCom admin, go to Settings > Taxes.
3. In the Tax nexus locations section, click Manage Tax Locations.
4. On the opened Tax Nexus Locations page, click + Create Nexus.
5. Choose what type of nexus you want to create: physical or economic.
   • For a physical nexus, enter location address information.
   • For an economic nexus, choose a state, enter any corresponding zip code for it, and schedule when this nexus should start being applied to orders in your online store.
6. Click Create & Start Tax Collection.
7. (optional) Create more nexuses on the Tax Nexus Locations page if you need.

Now, eCom will automatically calculate tax rates according to all your nexus states. You can always view, edit, or delete your tax nexuses in the eCom admin by going to Taxes > Manage Tax Locations.

Enabling VAT reverse charge at checkout (for EU stores)

If your business is located in the EU and you sell goods to another business and these goods are sent to another EU country, you do not charge value-added tax (VAT). If you sell within one country, you may need to charge VAT. The VAT rules also require you to save a customer's VAT number and make sure it’s a valid EU VAT number.

To enable VAT reverse charge for B2B sales in eCom:

1. Navigate to Online > Overview > Go to eCom (E-Series) to open the eCom admin.
2. In the eCom admin, go to Settings > Taxes.
3. Scroll down to Settings.

4. In the business model settings block, choose your option: Businesses and direct customers (B2B and B2C) or Businesses only (B2B):

   

5. Click Save.
6. Enable the Ask for buyers’ tax ID at checkout toggle below.
7. The changes will be saved automatically.

This will add the VAT ID number field at checkout. If a buyer located in another EU country enters a VAT ID in the field, the VAT reverse charge will be applied. If a buyer is from your country, VAT will be charged, as they should claim the VAT refund themselves. VAT numbers provided by customers will also be saved in the order details in the eCom admin panel for your future reference.

What's next?