VAT calculation when using pricing including taxes

1
votes

The prices are including VAT Tax. The VAT % applied is based on the delivery address. When the delivery country is changed and the VAT % changes, the the amount incl. tax is changed.

For example:

An amount of 0.79 euro is calculated as tax which corresponds with a delivery adress in the Netherlands. 19% Vat is applicable.

Price ex VAT 4.94/1,19=4,15 VAT Amount = 4,15*0,19=0,79

This is working fine.

When a change the delivery date to the country Belgium, where the VAT is 21%

Then the all the amount including tax is increaded. This should not happen as we choose use prices including tax.

The calculation thats is made by Magento is based on the price excel tax when 19% Dutch VAT was applicable and then applied 21 Belgian VAT: Price EX VAT: 4,15 = wroing amount has not been recalculated Belgian VAT Amount = 4,15*,21= 0.87 = wrong amount

The correct calculatio should be: Price ex VAT 4.94/1,21= 4,08 = correct price excl 21% tax VAT Amount = 4,08*0,21= 0,86 = correct 21% VAT Amount

Total price = 4,94 incl. VAT

For Belgium i get this price 5,02 and it should be 4,94.

Desired Outcome: The amount incl tax should stay the same regardless of the VAT% applied.

How can i fix this.

1
magento

1 Answers

1
votes

In fact i don't think your reasoning is good.

i explain:

  • the base price value of the product is it VAT free value.

For a given country, the product is applied a VAT to comply with country VAT related rates.

For wathever country you deliver the product, what changes is VAT but not product base price value , otherwise you'll loose some margin.

Say:

  • product A VAT Free price is : 100 and you bought it 80 (20 eur margin)

  • VAT for Netherlands is 19 : Taxed price for Netherlands => 119

  • VAT for Belgium is 21 : Taxed price for Belgium => 121

Wanting to keep 119 for Belgium would make loose you 2 euros ,since you would have virtually sold it for 98.

If that's really what you want to do : ie , flat price whatever VAT Rate is applide ,Then a "trick" might be to create customer groups based on their country & used tier pricing to reduce product base price in order to maintain VAT rate independent taxed price. (which i wouldn't recommend)