Scope
How is inclusive pricing calculated?
Calculate inclusive pricing when the origin country is given.
The next billing amount differs due to inclusive pricing calculation. Why?
Basic calculation - when we have inclusive taxation applied on subscriptions with and without the origin country.
Solution
Consider that you are based in the EU region and selling digital goods at a price of €100 per month. Your origin country is Belgium with tax configured at 21%. You are selling in the EUR Currency that is configured to be Tax Inclusive, and the origin EU region is set to be Tax Exclusive.
A customer's shipping address is in France; the end customer is not a business and therefore does not have a VAT number. The tax rate for this customer's invoice is calculated as follows:
France tax rate = 24%
Since the currency is inclusive, the €100 price of the plan is inclusive of taxes.
Actual price of the plan = €100/1.2 = €83.33
Since the region prices are exclusive of tax, a tax rate of 24% for the France region gets applied to the actual price of the plan, €83.33.
Invoice total = €83.33*1.24 = €103.33
€83.33 = subtotal
€20 = Taxes
Tip: The tax present in the origin country should be applied to the unit amount before calculating taxes.
eg:
Org address Canada: Ontario
Price type $USD - origin country Canada [inclusive]
Tax for Canada [Exclusive]
Ontario - 10%
Alberta - 20%
Customer
address - Alberta
Charge - $100
Merchant - Ontario - inclusive tax amount - $100 of 10% -- $88.50
Customer - Alberta - exclusive tax 20% on $88.50 - $17.70
Invoice:
Net Amount (excluding tax)
$88.50
Tax (20.0%)
$17.70
Gross Amount (including tax)
$106.20
If Canada is configured as Inclusive, then
Charge - $100
Merchant - Ontario - inclusive tax amount - $100 of 10% -- $88.50
Customer - Alberta - inclusive tax 20% on $88.50 - $14.75
Net Amount (excluding tax)
$73.75
Tax (20.0%)
$14.75
Gross Amount (including tax)
$88.50
Related articles
Sales calculator online if needed to calculate taxation