In this tutorial we are going to see how to configure taxes in WooCommerce for the Canary Islands, Ceuta and Melilla.
Taxes according to location
In it we see how to configure taxes in the control panel in general, but whether we are going to sell to the Canary Islands, Ceuta and Melilla and our company is subject to the peninsular tax regime, or if the headquarters are in the Canary Islands, Ceuta or Melilla, and we want to make the sale to the rest of Spain, we must know that these locations have different taxes.
In the Canary Islands, the IGIC (Canary Islands General Indirect Tax) is applied, a general tax that affects sales and also the provision of services. On the other hand, in Ceuta and Melilla the IPSI is applied, which is the Tax on Production, Services and Imports of said cities.
Although these are different taxes, the truth is that the way to configure them is similar. We will only have to differentiate between the sale of products or the provision of services to see what tax and percentage we must take into account.
Products and services
On the one hand, if we have a company subject to VAT and we sell products to the Canary Islands, Ceuta and Melilla, it will be necessary to assess whether it is considered an export of the product, in which case we will not have to charge value added tax. That is, it is considered exempt from VAT. On the contrary, if the company is based in the Canary Islands, Ceuta and Melilla and sells a product to the rest of the Spanish territory, subject to VAT, we will talk about an import, and in that case the IGIC would not have to be applied, if the headquarters are in the Canary Islands, or the IPSI, if it is located in Ceuta or Melilla.
On the other hand, in the provision of services to the Canary Islands, Ceuta and Melilla, assuming again that the company providing the service is in an area subject to VAT, we will have to differentiate between whether the recipient is an individual or a company, since the treatment is different and may or may not lead to the application of VAT. The same happens if the headquarters are in the Canary Islands, Ceuta or Melilla and the service is provided to the rest of the Spanish territory. In any case, especially if you have doubts, it is recommended that you consult your particular case with an advisor.
Well, in the following sections we are going to see how to technically configure different taxes in WooCommerce according to the territory to which the products are destined and the headquarters of the company. Although we will see a couple of examples, the rest would be done in the same way, you simply have to take into account the taxes that should or should not be applied to the products or services. Let’s go there!.
Taxes in WooCommerce
The first thing we will have to do is activate taxes in WooCommerce. To do this we must access the WordPress dashboard, “WooCommerce/Settings”, General tab, “Activate taxes” and then select “Activate taxes and tax calculations”.
Once we have selected it, we will save the changes and go to the “Tax” tab. Here we will find several fields that we will have to configure.
And here we configure the following options:
- Prices with taxes included: We will simply have to select if we want to enter the prices with or without taxes. We are going to mark them without taxes since in this way if they are modified it will not affect the price that we have entered. If we have few products, there will not be much to change, but if there are many, we can find ourselves with a lot of extra work.
- Calculate tax based on: There are three possibilities here, “Customer Shipping Address”, “Customer Order Address” and “Primary Business Address”. It is advisable to configure the second option since in this way the taxes will be calculated based on the customer’s billing data.
- Shipping tax class: In this field we will choose the type of tax that is applied to the shipment.
- Rounding: The tax will be rounded in the subtotal and not in each product line.
- Additional tax classes: If there is any kind of additional tax, it must be indicated here, one per line.
- Show prices in the store: To display prices in the store with or without VAT.
- Show prices in the cart and in the payment: The same as in the previous case but for the cart and the payment page.
- Suffix to show in the price: The text that is displayed after the prices. Ex: VAT included.
- Display of total taxes: Here we can choose between “As a single total” or “Detailed”.
Well, this time the settings will remain as shown in the following screenshot. If you have already entered products in the store, you can keep the value of the first section and modify the others. The most relevant thing here is to select “Customer order address” in the “Calculate tax based on” field.
When we have the general settings ready, the next thing will be to configure the taxes according to each particular case. In the next section we will see two examples, the first is that of a company whose headquarters are located in territory subject to VAT. This company sells products to the rest of Spain, so we will consider that it is an export and we will not have to apply VAT.
In the second, we will configure the taxes of a company based in the Canary Islands and selling to the peninsula or the Balearic Islands. In the cases of Ceuta and Melilla, the same procedure will be followed, only the main tax, instead of being the VAT or the IGIC, would be the IPSI.
Configure taxes for the Canary Islands, Ceuta and Melilla
Once we have finished with the previous section, we can access the “Standard rates” option. This is the page where we will configure each of the different taxes.
Here we will have to add a row for each province. There are several columns that we could fill in, we see them in detail in the “Additional tax classes in WooCommerce” section of the tutorial. Well, let’s go to the two cases that we have discussed.
Headquarters subject to VAT sale to the Canary Islands, Ceuta and Melilla
If the headquarters of the company is subject to VAT and it sells products throughout the Spanish territory, the first thing we will have to do is include VAT. To do this, we will click on “Insert row”, and then we will adjust the value of some fields: the country code (ES, Spain), the rate (21), the name of the tax, and we will also select both compound and shipping.
Next we will include the rest of the taxes, specifically one province per row. Again we would have to click on “Insert row”, and add each of the following rows.
In the country code we must insert “ES” for Spain, and for the province code the one that corresponds: “GC” (Las palmas de Gran Canaria),”TF” (Santa Cruz de Tenerife), “CE” (Ceuta) and “ML” (Melilla). Although it is not really necessary for us to know all the codes, they will appear as we write the province in the corresponding box.
Keep in mind that this whole process is similar for other areas with different taxes, for example other countries. Lastly, we will set the fees to zero and name the taxes as “VAT Exempt”.
With this we will have it well configured. Let’s make sure we have the last two columns checked, and save the changes.
Headquarters in the Canary Islands and sales to the rest of the territory
This situation is similar to the one explained in the previous section. First of all, we will have to configure the company’s main tax, in this case the IGIC, for the provinces of Gran Canaria and Tenerife. That is, we will insert a row for each one of them. If the headquarters were in Ceuta or Melilla then, in this first step, we would configure the IPSI.
Next, we will have to insert another row for the rest of the Spanish territory where the IGIC would not apply. We can do it simply by setting the country code “ES” and the province and city code as an asterisk, the rate to zero, and the name of the tax as exempt, as shown in the image.
And that’s it! To configure taxes correctly in WooCommerce we must take into account their value and the tax differences between the different territories. As you can see, the technical part is simple.
Summary and conclusion
If we have a company subject to the peninsular tax regime and we want to sell to the Canary Islands, Ceuta and Melilla, or we have headquarters in one of these last locations and we want to sell to the rest of the Spanish territory, we must configure the taxes in WooCommerce so that they appear correctly.
To do so we will have to have them activated and make some adjustments in the “Taxes” tab. Then we must add in “Standard rate” a row for each option. The first with the tax that corresponds to the tax system of the company, and the following for each zone with different taxes.
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