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EU Example Tax Configuration

The following example depicts a store based in France that sells > 100k Euros in France and >
100k Euros in Germany.

  • Tax calculations are managed at the website level.
  • Currency conversion and tax display options are controlled individually at the store view
    level, (Click the Use Website checkbox to override the default).
  • By setting the default tax country you can dynamically show the correct tax for the
    jurisdiction.
  • Fixed product tax is included for relevant goods as a product attribute.
  • It might be necessary to edit the catalog to ensure that it shows up in the correct
    category/website/store view.

Process Overview:
Step 1: Create Three Product Tax Classes
Step 2: Create Tax Rates for France and Germany
Step 3: Set Up the Tax Rules
Step 4: Set Up a Store View for Germany
Step 5: Configure Tax Settings for France
Step 6: Configure Tax Settings for Germany

Step 1: Create Three Product Tax Classes

For this example, it is assumed that multiple VAT-Reduced product tax classes are not needed.
1. Create a VAT-Standard product tax class.
2. Create a VAT-Reduced product tax class.
3. Create a VAT-Free product tax class.

Step 2: Create Tax Rates for France and Germany

Create the following tax rates:

Step 3: Set Up the Tax Rules

Create the following tax rules:

Step 4: Set Up a Store View for Germany

1. In the upper-left corner of the Admin, click the Manage Stores link.
2. Under the default website, create a store view for Germany. Then, do the following:
a. On the Admin menu, select System > Configuration. In the upper-left corner, set Default
Config to the French store.
b. On the General page, click to expand the Countries Options section, and set the default
country to “France.”
c. Complete the locale options as needed.
3. In the upper-left corner, set Current Configuration Scope to the German website. Then, do the
folloiwng:
a. On the General page, click to expand Countries Options, and set the default country to
“Germany.”
b. Complete the locale options as needed.

Step 5: Configure Tax Settings for France

Complete the following General tax settings:


Step 6: Configure Tax Settings for Germany

1. On the Admin menu, select System > Configuration.
2. In the panel on the left, under Sales, select Tax.
3. Click to expand the Default Tax Destination Calculation section, and do the following:

a. In the upper-right corner, set Current Configuration Scope to the German store.
b. To the right of the Default Country field, clear the Use Website checkbox. Then, set
Default Country to “Germany.”
c. To the right of the Default State field, clear the Use Website checkbox. Then, set Default
State to “*.”
d. To the right of the Default Post Code field, select the Use Website checkbox. Then, set
Default Post Code to “*.”
4. When complete, click the Save Config button to save the settings.

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