Managing taxes is a vital part of running an online business, especially 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.
Effective tax management ensures compliance with local regulations, keeps financial records accurate, and provides customers with clear, transparent pricing.
Solidgate offers a comprehensive tax management toolset designed to simplify these tasks. The tax solution allows you to configure taxes for all customer regions and apply them to invoices automatically. Tax calculations occur whenever an invoice is generated for a new subscription, a subscription renewal, or a one-time charge. Sales or service tax is calculated based on your tax configuration.
You can automate taxation for your invoices using Solidgate Tax, a deeply integrated, built-in solution.
Please note that Solidgate does not act as a tax expert but provides a solution designed to assist businesses with tax compliance and regulations. It is recommended to use the Solidgate tax solution in combination with professional tax guidance.
Configure taxes
Before collecting payments with taxes, you need to configure locations where you want to collect taxes.
Add tax locations
You can configure taxes for your taxable regions within your HUB account. Key aspects include:
- Location
- Tax application type
- Legal entities
- Start and end dates
- Go to Taxes > Locations.
- In the top-right corner, click on Add location.
- In the pop-up window:
- Select Location from the dropdown list.
- Set the Tax application type to inclusive or exclusive.
- Select one or several Legal entities from the dropdown list.
- Set the Start date.
- Optionally, set the End date.
- Click on Add to save the location.
Set default tax category
To simplify and automate product creation, you can set up a default tax category for your account. This ensures consistent tax configuration and makes product catalog setup easier.
- Go to Taxes > Tax settings.
- Next to Preset tax category, select the preferred tax category from the dropdown list.
The changes are saved automatically.
Create product with taxes
Once the locations and default tax category are created, you can associate them with products. When creating a product, you can configure both the tax behavior and tax category. Solidgate categorizes products using product tax categories to apply the correct tax rates based on regional regulations.
Tax behavior affects tax calculation in the same way as the tax category, with tax behavior options including:
- Location preset
Product price is calculated based on rules configured in locations. - Inclusive
Product price is the gross price and already includes applicable tax. - Exclusive
Product price is the net price, and taxes are added later.
If you select inclusive or exclusive tax behavior, it takes priority over the location preset settings.
Understanding and selecting the correct tax behavior is essential for accurate product pricing, managing customer expectations, and maintaining compliance.
Once you add locations and are ready with the tax category, you can associate them with products and define the type of taxation:
tax_category and tax_behavior fields, they are automatically filled with default values from the Solidgate HUB:
- Tax category is taken from the tax category preset
- Tax behavior is taken from the location preset
- Go to Billing > Products.
- Find the needed product and click on it.
- In the Tax section, click on Edit.
- Select the needed tax category from the dropdown list.
- Select the tax behavior from the dropdown list.
- Click on Save changes.
Tax calculation
Once you set up taxes and apply the tax category and behavior to a product, the system handles tax calculation automatically. Taxes are applied to future sales and all added locations.
The final price depends on the location setup, product settings including tax category and behavior, and the customer’s actual location. If a location is not included in the setup, tax is neither applied nor calculated.
Calculations follow the location configuration and depend on whether the tax is included in or excluded from the product price.
| Inclusive type | Exclusive type | |
|---|---|---|
| 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 efficiently manage card payments from your customers. Host-to-host
Before creating a payment request, you should call the price calculation API endpoint to receive the final price information with tax details.
-
Guide
- Taxes are calculated based on the customer’s location, including their address, ZIP code, other relevant details, and collected as follows:
- Payment Form prompts customers to enter their location when paying with a card.
- Apple or Google Pay uses the billing address from the customer’s digital wallet.
- Host-to-host integration uses the customer’s address provided by the merchant.
- 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.
Solidgate supports all types of payments, including
Guide
Accept and manage cad payments from your customers.
card
and
Guide
Connect alternative payment methods to boost your checkout conversion.
alternative payments
such as PayPal, and covers the full payment lifecycle, including sales, refunds, and chargebacks. It helps businesses efficiently handle chargebacks and refunds, maintaining smooth payment processing.
Moreover, Solidgate provides tax data exports to assist with compliance and financial analysis. You can choose between a transactional tax report or a summary report with aggregated tax data.