Setting up taxes in Recharge

As a merchant, you may need to charge and collect tax from your customers and remit those taxes to the government. While understanding tax laws and regulations can be complicated, Recharge has made it easy for you to collect taxes on each order. 

This guide provides instructions on how to begin charging taxes in Recharge, as well as how to adjust tax settings.

Before you start

• You should always consult with a local tax expert to ensure that you are charging customers the correct sales tax.
• While Recharge makes it possible for you to collect taxes from your customers by charging taxes on each order, we do not remit your sales tax for you. 

Enable taxes in Recharge

To enable taxes in Recharge:

1. In the Recharge Dashboard, click the wrench icon and select Taxes.
2. Select Charge sales tax in the Charge tax section.

General tax settings

Specify your tax rules and how they should be applied in the Tax details section. 

Include shipping rate in taxed prices

If enabled, Recharge will apply the tax rate to the cost of shipping in addition to the total order price. 

Include all taxes in prices 

If enabled, Recharge will not apply additional tax to the total order price. Instead, the system will apply a formula to the total price and report the amount that should be considered taxable.

The formula that is used:

tax = (tax rate * price) / (1 + tax rate).

For example, a customer purchases a product that is £1.00 at 20%, the VAT will be £0.17 (rounded). The customer will be charged £1.00 and your store will be responsible for remitting £0.17 when reporting their taxes.

Run a check to see if all products are taxable

When enabled, Recharge will query Shopify for the tax settings on individual products to see if tax should be applied. If this setting is not checked, Recharge will apply taxes to all products in Recharge. 

Charging tax in the US

If your business has a physical or economical connection with any state in the US, you likely need to charge sales tax. Visit our guide to charging taxes in the US for specifics on setting up your US tax rates.

Charging tax outside the US

To learn more about how taxes are calculated for orders originating outside of the United States, visit our guide to charging taxes outside of the US.

Update tax settings

When you adjust your tax settings in Recharge or Avalara, the tax rate is updated for existing subscription customers on future orders. Updating tax rates does not modify existing queued charges, only future orders. Contact our support team if you update or add additional tax rates in Recharge or Shopify so that we can resync these rates and perform a bulk update.

Subscription customers are not impacted if tax settings are only updated through your eCommerce platform.