Adding tax rates and tax overrides/exemptions [NB]

There are several areas in the Lightspeed eCom Back Office where you need to enter tax or VAT rates, such as for products, payments and shipping methods. As a result, you'll need to set up tax/vat rates, and if applicable, a default tax/vat rate for your store.

NOTE: If you are located in the United States or Canada, enable automatic tax rates for your store.

Also, depending on your store's location, you may need to create tax overrides or exemptions. Tax overrides let you specify how much tax your customers pay for a particular product, and to handle exceptions, such as products that are exempt from taxes. You can also specify a unique tax rate for a particular shipping destination or for tax-exempt customers.

Here are some example where you may need to specify tax overrides:

  • Provincial tax exemptions in Canada
  • State tax exemptions in the United States
  • Tax overrides to comply with EU VAT regulations
  • Products that are exempt from taxes

In this article

To add a manual tax rate (European merchants)

NOTE: If you are located in the United States or Canada, enable automatic tax rates for your store.

  1. On the left menu of the Back Office click Settings > Payment Settings > Taxes.
  2. In the MANUAL TAX RATES area click Add Tax Rate.
  3. Give the rate a name, such as 21% VAT or 5% tax.

    TaxesNoAm_7.png

  4. Enter the applicable VAT or tax rate in the Tax field. For example, if you want to specify a VAT rate of 21%, enter a value of 21 here.
  5. If you use several rates, you can choose one as the standard rate by clicking Default. This default rate is automatically applied to all new products that you add.

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  6. If the country has a regional tax, click Edit and add a regional tax.

    TaxesNoAm_9.png

  7. Select a country and a region and add a Tax name, Tax rate and Tax type

    TaxesNoAm_8.png

  8. Click Save to add the regional tax and repeat these steps for every region. 

To create a tax override

For the United States

  1. Enable automatic tax rates.
  2. On the left menu of the Back Office click Settings > Payment Settings > Taxes.
  3. Click United States.
  4. From Tax Classes click Add a tax class.
  5. Give the tax class a name, such as Children's clothing.
  6. Click the tax class you want to work with, add products to it and save your changes.
  7. From Settings go to Taxes and click United States.
  8. Click Add a tax override and select a tax class.
  9. In the Tax Overrides area click the tax override and configure it.
  10. If you are in New York state and your tax class is clothing, from Tax Rules select New York Clothing under $110.
  11. In the Tax Rates area, for each state that you have a store in, enter the rate.
  12. For each state you can optionally apply the rate to all counties and cities.

For Canada

  1. Enable automatic tax rates.
  2. On the left menu of the Back Office click Settings > Payment Settings > Taxes.
  3. Click Canada.
  4. From Tax Classes click Add a tax class.
  5. Give the tax class a name, such as Children's clothing.
  6. Click the tax class you want to work with, add products to it and save your changes.
  7. From Settings go to Taxes and click Canada.
  8. Click Add a tax override and select a tax class.
  9. Click the tax override and configure it.
  10. In the State/Provincial area for each province that you want to apply the override to, enter a rate, and optionally change the name and tax type:
    • Combine with the federal tax: add the rate to the country's rate.
    • Replace the federal tax.
    • Compounded with the federal tax: the federal tax is applied to the subtotal, then the tax override is applied.

For Europe

In Europe, threshold values are considered when applying VAT. For example, if any of these situation applies to you:

  • Your yearly sales to customers or entrepreneurs who do not declare taxes exceed the threshold values for that country, as established by the tax authorities.

    OR

  • Your yearly sales to organizations that are not legally classified as entrepreneurs exceed the threshold values for that country, as established by the tax authorities.

You MUST charge the VAT rate for the customer's country.

This is necessary only if your turnover for a particular country exceeds its threshold value. If your turnover is lower than the threshold value, or if you sell only in the country you're located in, you don't need to configure tax overrides.

  1. On the left menu of the Back Office click Settings > Payment Settings > Taxes.
  2. Click the name of the tax you want to create an override for, such as Children's clothing.
  3. Click Add a tax override
  4. Configure the override:
    • Country – Select the country you want to apply the override to.
    • Region - Optionally select a region.
    • Tax name – Enter a name that the override applies to, such as VAT.
    • Tax rate - Enter the applicable tax rate for the country that the threshold value has been reached for.
    • Tax type - select how the rate is applied.
  5. Click Save to add the tax override. The tax rate that you configured will now be applied to all new orders from that country.
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