An in-depth look at price and tax settings in WooCommerce: a comprehensive look at taxed and untaxed pricing strategies

In this article, I will mainly explain to you WooCommerce The available settings in the Go to "WooCommerce” > “set up " page, you will see different types of settings tabs throughout the page.There are many settings tabs included in the WooCommerce plugin, so let's take a look at them together.

Define Price

Product PriceIt can be defined as:

1. tax inclusive
2. excluding tax

When it comes totax-inclusive pricingWhen referring to the storecountryof the tax. For example, if the country where your store is located is the United Kingdom, then you will define the product price with a tax rate of 20% (freight feefrom beginning endDefined as excluding taxes).

keep in mindIf the price includes tax and the tax rate in that country is different from the store's base country, the price that the customer sees may vary depending on the tax rate in their country/region.

For example, in your store located in the UK, configured with only one tax rate, it would look like this:

• Created a product with a price of £120 including tax.
• Customers with addresses in the UK pay £120 (£100 + £20 VAT).
• Customers outside the UK pay £100 as there is no tax rate to match their location.

or

Your UK store sells to the UK (20%), France (19%) and Norway (25%), in which case the store operates as follows:

• Created a product with a price of £120 including tax.
• UK customers pay £120 (£100 + £20 VAT).
• French customers pay £119 (£100 + £19 tax).
• Norwegian customers pay £125 (£100 + £25 tax).
• Customers outside the UK, France or Norway pay £100 again as they do not pay any rates.

Tax calculations (simplified)

The tax calculation isby rowInstead, it is calculated on a commodity-by-commodity basis. The following calculation can be used to figure out how much tax is due on a given price.

Calculate excluding taxProduct price 20% tax rate:

Tax = Line Price * 0.2

Calculate tax includedProduct price 20% tax rate:

Tax = Line Price - ( Line Price / 1.2 )

Note that when the price is inclusive of tax, the tax is not exactly 20% of the total lineal price. in the example in the previous section, if we only calculate 20% of the total lineal price (£120), we end up with the wrong24 pounds sterlingThis includes the base product of 20% and the added tax. Therefore a different calculation method is used.

Cross-border/country/regional taxes

Calculating the tax on the excluded price for each country is simple;Just take the ex-tax price and multiply it by the tax rate.Prices including taxes are slightly more complicated.

price excluding tax

Let's take the example of a sale from the UK (20% tax) to Germany. The UK price for this product is 120 (including tax). If the UK seller sold the physical item in Germany without tax, then the German price would be as shown below:

• UK price = 120 / 1.2 = 100
• UK tax = 20
• German price = 100

Let's take the same example as above, but consider a digital good to which the 19% tax rate applies. First, we eliminate the UK tax and then apply the German tax as follows:

• UK price = 120 / 1.2 = 100
• UK tax = 20
• German price = 100 * 1.19 = 119

tax inclusive price(classical) obstruct

A common feature request is to charge the same amount across locations and absorb the tax difference. Based on the two previous examples, this would result in the following.

When selling from the UK (20% tax) to Germany, the product price is 120 including tax. If the UK seller is not required to charge tax on the physical item in Germany, then the situation is as follows:

• UK price = 120
• UK tax = 20
• Price in Germany = 120
• German tax = 0

Prices in Germany are the same as in the UK, except that Germany does not include taxes, so the basic product is more expensive.

For digital goods subject to the German tax of 19%, the calculation is as follows:

• UK price = 120
• UK tax = 20
• German price = 120 / 1.19 = 100.84
• German tax = 120 - (120 / 1.19) = 19.1596

Prices remain the same in Germany, but when we levy the tax, we find that basic product prices are slightly higher than in the UK.