VAT & Sales Tax
Add sales tax to your checkouts with CheckoutJoy.
Sales Tax
CheckoutJoy's Sales Tax feature makes it easy to add VAT/GST to your invoices based on where your customer is from.
Note for Quaderno users
This feature is our in-house sales tax processing and is not the same as our Quaderno integration.
If you are using Quaderno for your sales tax, please see our Quaderno help pages to set
up Quaderno integration with CheckoutJoy.
Also see our feature comparison for the difference between our in-house Sales Tax features and Quaderno.
How does it work?
When a customer visits your checkout pages, CheckoutJoy automatically determines if the customer must be charged sales taxes based on where they're from. If they are from a country that is part of your tax jurisdiction setup, then the taxes are automatically calculated and added to the cart.
Tax can be set up to either be inclusive or exclusive, meaning that you can either include the tax in your product price - so the tax won't change the price you set for your product, or you can add the tax on top of your product price.
For this to work, you must add all the tax jurisdictions where your business is registered for VAT, and set whether you want tax to be inclusive or exclusive.
Note that your business needs to be already registered in the jurisdiction when adding a tax jurisdiction to CheckoutJoy.
CheckoutJoy will activate the appropriate tax settings for the jurisdiction, which are based on the tax code and product type of the products at checkout.
Tax Jurisdictions
Tax jurisdictions are the countries, regions or states where your business are registered for taxes. When you add a tax jurisdiction to your sales tax settings in CheckoutJoy, all the checkouts will automatically start adding taxes based on where the customer is from.
For example, EU businesses belong to the European Union - VAT OSS/IOSS jurisdiction which includes all the tax rules for the entire EU.
When you add the European Union - VAT OSS/IOSS tax jurisdiction, the checkouts will add the applicable EU VAT rates for
EU customers.
US based businesses can add state-specific jurisdictions, depending on where they are registered for tax collection.
To add a Tax Jurisdiction, your business needs to be registered in that jurisdiction and have a valid Tax ID.
Tax Codes
A Tax Code is the type of tax that is applied to product and depends on the type of product and the local laws of the jurisdiction you're selling in. Different tax codes might impose different tax rates depending on these local laws.
For example, an online course could be charged at the Electronically supplied services rates, while an online consultation like a Zoom call
could be charged at the Consulting rates.
The rules that determine which tax code to use for a product depends on the rules and laws of your jurisdictions. It is therefore your responsibility to select the appropriate tax code for your products.
The following is the list of available tax codes for products.
| Tax Code | Description |
|---|---|
| Consulting | Any consulting and professional service, for example lawyers, designers, engineers, tax advisors, etc.). |
| E-Book | An electronic book that is sold with unlimited use. |
| Electronically supplied services | Service that is delivered over the internet. It is essentially automated, involves minimal human intervention and in the absence of information technology does not have viability. |
| Non-taxable | Any nontaxable good or service. No tax is applied for jurisdictions that impose a tax. |
| Reduced tax rate | Specific goods and services with a reduced tax rate. |
| Software as a service (SaaS) | Cloud services software delivered over the internet. The software is not customized for the specific buyer. Assumes no software is downloaded by the buyer. |
| Generally taxable | Any taxable good or service. For jurisdictions that impose a tax, the standard rate is applied. |
The default tax code when you enable the Sales Tax feature is Electronically supplied services. You can change this in the Sales Tax settings dashboard.
You can also set the tax code for products specifically to force the tax code for a specific product. If no product-level code is set then the default tax code will be used.
Example
Your company is registered for taxes in the EU, and you've added the EU as a Tax Jurisdiction in CheckoutJoy.
When a customer from the EU visits your checkout pages, CheckoutJoy automatically determines if the customer must be charged sales taxes based on where they're from. If they are from a country that is part of your tax jurisdictions, then the taxes are automatically calculated and added to the cart.
Setup
To enable Sales Tax for your account, you will need to complete the following steps
- Enable Sales Tax in your Dashboard.
- Set up the Tax Jurisdictions where your business is registered for taxes.
- Customize your Invoices that is generated after a sale or recurring payment.
Once all steps are completed, your checkout pages will start adding sales tax calculations to the cart based on where your customer is from.
Tax Registration Thresholds
Some countries impose a registration threshold which means that your sales to residents of a certain country
There are different types of tax registration thresholds which might depend on how much you're selling in a year, or your physical presence in a country, but the most common type of thresholds are based on sales - i.e. how much are you selling to the residents of a certain country.
Every jurisdiction defines its own thresholds - Quaderno's Worldwide Tax Guide is a great resource to check the thresholds of all the jurisdictions around the world.
What if I exceed a tax threshold for a certain country or jurisdiction
When you exceed the tax registration threshold of a jurisdiction, you need to register your business in the tax jurisdiction and start collecting taxes for your sales. You also need to file tax returns for the taxes collected.
CheckoutJoy will notify you by email when a tax threshold has been exceeded for a jurisdiction where you are not yet registered. When you receive the notification, it's best to contact your accountant or tax advisor straight away.
Feature Comparison with Quaderno
Here's a comparison of the features included in our Sales Tax feature with the features offered by Quaderno
| CheckoutJoy's Sales Tax | Quaderno | Notes | |
|---|---|---|---|
| Automatic Sales Tax Calculations | ✅ | ✅ | Inclusive/Exclusive taxes based on your jurisdiction(s) |
| Invoices | ✅ | ✅ | PDF invoices generated for every sale |
| Email invoice to customers | ✅ | ✅ | PDF emailed to customer |
| Business Number Validation | ✅ | ✅ | EU,UK,AU,NZ businesses |
| Multiple Jurisdictions | ✅ | ✅ | |
| Custom Tax Rates | ❌ | ✅ | Override standard tax rates for jurisdictions |
| Detailed Turnover Reporting | ❌ | ✅ | Turnover per country, tax return reports |
| Tax Support | ❌ | ✅ |
CheckoutJoy's Sales Tax feature is not meant as a replacement for our Quaderno integration, so if you're currently using Quaderno or if you have a complex tax setup with multiple jurisdictions and require tax support, then our Quaderno integration is still our recommended choice for tax handling.
Tax Reports
You can download your tax reports for a specific time period from the CheckoutJoy Tax Report Dashboard.
The report is a single Microsoft Excel file that provides the following reports as sheets in the Excel file.
| Notes | |
|---|---|
| Tax Summary | A summary of all the taxes collected for the active tax jurisdictions. |
| **Sales Per Country ** | A summary of all the taxes collected per country. |
| **Invoices ** | A list of all the invoices generated for the selected period. |
| **Invoice Items ** | A list of all the products (invoice line items) for the selected period. |
| ** Payments ** | A list of all the payments received for the selected period. |
Reporting Currencies
Because of the multi-currency feature, all reports contain 3 types of currencies
- Transaction Currency - the currency that the customer paid
- Local Currency - the local currency of the CheckoutJoy account, based on the country of origin.
- Accounting Currency - the reporting currency of the tax jurisdiction. E.g. if your business is based in the US, and you collect sales tax in the EU, then the accounting currency of a sale made to a EU customer is Euro
All currency conversions are done using the conversion rate at the time of the transaction.