page last edited on 25 January 2018
Different countries may impose special taxes on delivery, be it shipping, handling, postage, or any other associated fees. Usually when a taxable product or service is sold, any charges for shipping or delivery that a merchant includes in an invoice may become part of the receipt subject to tax. When both taxable and nontaxable products or services are combined into a single charge in one invoice, the entire invoice is taxable, including any shipping or delivery charges. Nontaxable products or services do not imply taxes on shipping, however this can also vary depending on the country.
In the US, a merchant should charge sales tax on shipping charges when making a sale to a buyer in one of the nexus states if that state’s tax law declares that shipping charges are taxable. Sometimes it can become challenging because some US states require that retailers charge sales tax on shipping charges, while other states do not.
European taxes on shipping are also not that simple. For example, in the UK a merchant should charge a maximun VAT rate of the order on the shipping costs as well. In other European countries the percent of VAT charged on shipping may be average of all VAT rates charged. VAT rates applied to a purchase may also depend on whether the goods are sold within a certain country or outside.
Anyway, if you are required to charge a tax on the delivery of goods from your store to the buyer, X-Cart can be configured to calculate the shipping tax amount in most cases.
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