Managing taxes is a vital component of running an online business, particularly for companies operating across multiple jurisdictions or offering diverse
Guide
Explore how to create subscription products and prices to streamline payment processing with multi-currency.
product
ranges.
Proper tax management is essential for ensuring compliance with local regulations, maintaining accurate financial records, and providing customers with clear and transparent pricing information.
Solidgate provides an effective tax management toolset that allows businesses to create and manage multiple tax profiles, set up region-specific tax rates, and configure products with appropriate tax settings. This flexibility is vital in accommodating various taxation models, such as tax-included or tax-excluded pricing, and adapting to different regulatory requirements across countries and regions.
Please note that Solidgate does not act as a tax expert but provides a solution designed to assist merchants with tax compliance and regulations. We recommend using our solution in combination with professional tax advice.
Configure taxes
Before collecting payments with taxes, it is essential to configure the tax rates for your products.
Create tax profile and rates
You can configure taxes for your taxable regions within your HUB account. Key aspects include:
- Managing multiple tax profiles when dealing with diverse tax rates and compliance requirements.
- Specifying tax rates for particular locations and setting start date for each rate.
- Defining tax settings for your products or services, tailored to specific countries.
This flexibility allows you to tailor tax settings to the specific needs of your business, regardless of product complexity or customer base diversity.
To create a tax profile
- Go to Account settings > Tax profiles.
- In the top-right corner, click on Add profile.
- In the pop-up window, specify a name for your tax profile.
- Click on Create to save it.
To add rates to a tax profile
- Go to the Tax profile page.
- Find and click on the needed tax profile.
- In the Tax rates section, click on Add rate.
- In the pop-up window, complete in the rate information:
- Location
- Rate
- Effective from date and time in UTC
- Click on Add to save a new tax rate.
If the tax rate changes due to new regulations in a specific country, you can proactively create a new tax rate with a future start date set in UTC. Consider time zone differences when setting up future tax rates to guarantee accurate and timely implementation of tax changes across different regions.
Apply tax profile to product
Once the tax profile and rates are created, you can associate them with products and define the type of taxation:
- Tax included
The product price is already the gross price and includes the applicable tax. - Tax excluded
The product price is the net price and taxes will be added later.
Understanding and using the right type of taxation is essential for setting accurate product prices, managing customer expectations, and maintaining tax compliance.
is_included value to true for included tax or false for excluded tax.
To apply a tax profile to a product
- Go to Billing > Products.
- Find the needed product and click on it.
- In the Taxes section, turn on the toggle to open settings.
- Select the created tax profile from the dropdown list.
- Select the tax type to be applied to the product.
- Click on Save changes.
- If the product has subscriptions and has no tax settings, the only option to modify this product is by adding a tax profile with the tax included type. This ensures that taxes are applied to future payments without impacting current customers.
- If the product has subscriptions and tax settings applied, there is no option to modify the product. You should create a new product or tax rate with a future effective from date.
Tax calculation
Once you set up a tax profile and configure it on a product, taxes will automatically be calculated and applied to all your future product sales and locations in the tax profile.
The final price will be based on the tax profile configuration, product configuration, and customer location. If the location is not defined in the tax profile, the tax will not be calculated and applied to product sales.
Calculations are based on the tax type, depending on whether the tax is included or excluded from the product price.
| Tax included | Tax excluded | |
|---|---|---|
| Product: | Digital product monthly subscription | Digital product monthly subscription |
| Price: | €20 (tax included) | AU$20 (tax is NOT included) |
| Customer location: | Germany | Australia |
| Tax rate: | VAT 19% | GST 10% |
| Tax amount: | €3,19 | AU$2 |
| Total amount: | €20 | AU$22 |
The payment process with tax calculations unfolds as follows:
- The merchant creates a product and configures taxes for it.
- A customer selects the product and adds it to their cart for payment.
- The merchant turns to one of Solidgate’s payment solutions for displaying the price and for payment processing:
-
Guide
Create a custom payment form for a personalized experience. Payment Form
It has the payment details event used to keep track of updates and changes to payment data, including price, taxes, and other relevant information. -
Guide
Accept and manage payments from your customers. Host-to-host
Before creating a payment request you should call the price calculation endpoint to receive the final price information with tax details.
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Guide
- Solidgate calculates the final price based on the product and tax configurations and returns this information to the merchant.
- The merchant displays the calculated price to the customer.
- The customer can now see the final price to proceed with the payment.
Furthermore, Solidgate helps businesses to effectively handle chargebacks and refunds, ensuring seamless payment processing and resolving disputes efficiently.
Tax reports
Solidgate offers comprehensive tax data exporting to assist with compliance and financial analysis. These exports encompass transaction data, including:
- Order ID
- Transaction and tax types
- Price and tax amounts
- Country and more
There are the following types of data exports you can access in the Reports&Exports section of the Solidgate HUB :
- Transactional tax
This export provides comprehensive details on all transactions for a specific account over up to one year. For example, when you download the file with transactions for the last month, you will find a comprehensive set of data that can be broadly categorized into several groups:- Transaction and product details: order id and description, external psp order id, transaction id, product id, processing time
- Business-related information: channel, legal entity
- Financial information: processing amount, processing currency, payment category
- Tax-related data: tax type, tax rate, tax state, taxable amount, tax amount, tax location
- Geographical data: bin country, ip country, geo country, postal code
- Summary tax
This export provides aggregate data from your account, with its structure and content varying based on the number of:- Tax locations in your tax profiles
- Processing currencies in these locations
- Legal entities associated with your Solidgate account
| Legal entity | Country code | Country | Tax rate | Taxable amount | Tax amount | Currency |
|---|---|---|---|---|---|---|
| Legal entity 1 | AUT | Austria | 20% | 100.00 | 20.00 | EUR |
| Legal entity 1 | BEL | Belgium | 21% | 150.00 | 31.50 | EUR |
| Legal entity 1 | GBR | UK | 20% | 180.00 | 36.00 | GBP |
| Legal entity 2 | AUT | Austria | 20% | 120.00 | 24.00 | EUR |
| Legal entity 2 | GBR | UK | 20% | 200.00 | 40.00 | GBP |
To export the tax data
- Go to Reports&Exports.
- In the top-right corner, click on +Create report.
- In the pop-up window, add the required information:
- Select Transactional tax or Summary tax export type
- Specify a date range of up to 1 year
- Optionally, change the auto-created file name
- Click on Create.
Once confirmed, the exports are created for each selected channel. - Click on Download to save and view the file.