As a merchant, you may need to charge and collect tax from your customers and remit those taxes to the government. ReCharge uses automated tax rates to calculate taxes for you based on the regions you ship to as set in Shopify. This guide provides instructions on how to enable tax in ReCharge and how to adjust tax settings.
Enable taxes in ReCharge
To enable taxes in ReCharge:
- In the ReCharge Dashboard, click the wrench icon and select Taxes.
- Select Charge sales tax in the Charge tax section.
General tax settings
With Tax details, you can specify your tax rules and how they should be applied.
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.
Charge tax in the US
If you are located in the US, you will need to charge tax based on the location of your business. You can list the zip code for the states in which you have tax nexus in the Add a physical presence section.
ReCharge will automatically calculate tax based on whether the location is in an origin-based state or a destination-based state. You can list more than one zip code in this section.
Charge tax outside the US
When you install ReCharge, we will automatically sync your tax regions based on your shipping zones in Shopify. If you modify your shipping or tax regions in Shopify, it will not automatically sync with ReCharge. You will need to reach out to ReCharge support to re-sync your tax settings.
Collect VAT
If you're from the EU, you'll want to monitor the Value Added Tax or VAT. This is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the European Union. With ReCharge, you can now calculate and record the tax amount if the tax is included in your prices which is especially useful for EU VAT regulations. These tax amounts will show up in your Shopify reports.
Update tax settings
When you adjust your tax settings in ReCharge, it will affect all existing customers and the new tax rate or settings will be used for the next order. If tax settings are only changed in Shopify, it will not impact subscription customers in ReCharge.
Tax overrides and exemption
At this time, ReCharge does not work with the Shopify tax override feature. If you use tax overrides in Shopify, they will not be reflected in ReCharge.
You can set a tax-exemption for individual products by turning off the tax setting on the product in Shopify. Ensure that the Run a check to see if all products are taxable setting in Settings > Taxes is enabled in your ReCharge dashboard.
ReCharge has a feature in beta that you can use to set tax exemptions on a per-customer basis as well. To enroll in the customer tax exemption open beta, please send a message to the ReCharge support team.
Marking a customer as tax-exempt
Once you’re enrolled in the beta, you have the ability to mark individual customers as tax exempt. You will find a new option on the customer profile page:
- Select Customers in the ReCharge Dashboard.
- Search for the customer you want to mark as tax exempt, then drill down into their details by clicking on their name.
- Click on See details next to the order ID number underneath the customer’s name.
- Scroll down and click on Additional Info & Settings.
- Click on the toggle slider to the right of Tax exempt.
- Click Confirm on the popup. ReCharge will process the request and mark the customer as exempt.