Set up taxes in WooCommerce and generate reports

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As in any business (physical, online or mixed), managing taxes may seem complicated at first, but thanks to WooCommerce you will be able to carry out this task in a simple and less tedious way 🙂

With WooCommerce you can configure the taxes that apply to your products and generate reports that you can pass on to your tax advisors or use to manage yourself and comply with the Treasury.

Learn how to manage taxes yourself in WooCommerce!

Activate taxes and tax calculations in WooCommerce

As is logical, the first thing you have to do is activate the tax option, which we find in the general settings in the menu of WooCommerce -> Settings -> Tab General

You must activate the option “Activate taxes“: Activates taxes and tax calculations.

Done, with this you are already telling WooCommerce that you want to use taxes in your online store.

Set up taxes in WooCommerce

To configure taxes in WooCommerce you must go to the WooCommerce settings in the menu WooCommerce -> Settings and then go to the tab Tax and then go to the section tax options.

In this section you can configure the general options, which are the following:

• Prices with taxes included: here you will tell WooCommerce if the prices that you will be putting on the products are with taxes included or not.

Be careful!: this option does not modify the prices that you have already entered in the products before activating and configuring the taxes.

• Calculate tax based on: We must choose whether the VAT calculation will be made based on the country where we have the store (Main Business Address), or based on the customer’s address, either shipping (Customer Shipping Address) or billing (Delivery Address). client’s order).

Let’s see the options in more detail:

○ Customer order address: is the recommended option so that, in this way, you make sure that the taxes are calculated based on the customer’s billing data.

○ Customer shipping address. If you select this option and the customer checks the “Ship to another address” option on the checkout page, taxes will be calculated based on the shipping address and not the billing address (if the customer does not ship to another address, taxes are taken default billing information).

“The problem with this option is that many invoice plugins will show you two different customer addresses (one for shipping and one for billing) and the taxes on the invoice will not match the billing data, which It can lead to problems with the Treasury.”

○ Main business address. With this option selected, WooCommerce will always take the physical address of your store (the one you have configured in WooCommerce -> Settings -> General -> Main location). It only makes sense to select it when you only sell to customers from your own community.

• Shipping tax class: By default, the option is marked “Shipping tax rate based on the products in the cart” and it is the one that you will surely want to leave selected, since it will be applicable in the same way to the final customer.

But you can also directly set a type, such as “Standard” or whatever you set later.

• Rounding: Checking this option, the rounding of the decimals will be done in the subtotal of the cart instead of for each product line.

Personally, I recommend leaving it checked, since in this way it adds everything first and then rounds at the end of everything, which is always more exact, since it keeps all the VAT decimals until the final calculation.

• Additional tax classes: Here you can add various types of taxes or VAT. Although generally the “Standard” class that comes by default will suffice, in some cases we will have other taxes or reduced versions of it.

For example, for certain items or delivery addresses, VAT is 4% or 10% instead of 21%.

Add, modify and delete a tax class

WooCommerce brings by default 3 classes or types of taxes: “standard rates“, “Reduced Rate Rates” Y “Zero Rate Rates“.

If you need to create other new tax types (a new tax class), you can do it from the WooCommerce settings (in the menu WooCommerce -> Settings) in the tab of Tax -> Tax Optionsadding a new line with the name of your tax in the “Additional Tax Classes” and then save the changes.

When you reload the “Tax” You will see above the new tax created (in this example the Special Tax).

To delete a tax class, you must delete it (the line where it is written) in the section of Additional Tax Classes which is in the tab Tax -> Tax Options and save the changes again.

Add, modify and delete taxes in a class

You must go to the WooCommerce settings in the menu WooCommerce -> Settings and then go to the tab Tax and then to the section of the desired type of tax.

Add taxes in WooCommerce

To add a new tax, you must click on the button insert row.

Then you have to fill in the fields that I name below:

• Country code: Which country are you going to allocate the tax to? If you apply to all countries, you must leave it blank.

The country code is made up of 2 capital letters, Spain has the code “ES”.
You can see the codes of each country in the “Alpha-2-code” column of the table that you can see in .

• Province code: In this field you can add the province code.
  They are the last two letters of the “Code” column of the table that you can see in .
  Leave it blank to apply to all provinces.
• Postal Code: We can specify a tax for one or more postal codes.
  Leave blank to apply to all zip codes.
  They can be specified in the following ways:

○ Typing the postal codes in the field separated by semicolons “;”.

○ Postal codes with wildcard *: For example “330*” is equivalent to any postal code that begins with 330 (33001, 33015, etc).

○ Postal codes with range rules: For example “33000…33100” is equivalent to any postal code between 33000 and 33100.

• City: We can also specify the names of the cities separated by semicolons “;”.
  Leave it blank to apply to all cities.
• Rate %: Percentage of tax to apply with 4 decimal places. For the normal VAT it will be 21%, the reduced VAT would be 10%, the super-reduced VAT would be 4%, etc.
• Tax name: We indicate a name so that the user can identify it in the store.
• Priority: In case of applying more than one tax to the same product, in what order will they be applied. The priority with the lowest number (1) takes precedence.
• Compound: If you activate this box, the tax will be applied to the product before applying the rest of the taxes.
• Shipment: Here you will specify if the tax also applies to shipping costs.

You also have two buttons to import or export in a .csv file with the taxes of that class:

• Import CSV: It takes us to another form so that we can import a .CSV file with taxes.
• Export in CSV format: This button allows us to download a .CSV file with the taxes of the current class.

In this way, for example, if the VAT values ​​are updated, you can export your taxes, modify them in the .CSV file and then import it to update them in bulk in your WooCommerce.

Remember to click on the Save Changes button so that they are saved.

As an example, we see how the new tax would look in the “Standard Rates” class (VAT of 21% for Spain):

Click on image to enlarge

Configure VAT exemption for the Canary Islands, Ceuta and Melilla in WooCommerce

Spain has some regions that are exempt from VAT as is the case with Canary Islands, Melilla and Ceuta.

“”These regions have other taxes, which the customer will pay at customs, if your store is not located in one of these regions.””

Therefore, you will need to (if you are selling to customers residing in these regions) set up these tax exceptions as follows:

Click on image to enlarge

You must insert a row for each province. The province codes you should use are:

• “GC” (Las Palmas)
• ”TF” (Tenerife)
• “CE” (Ceuta)
• “ML” (Melilla)

We will not use postal codes, so that field will remain with the “*”.

We are going to assign a rate of 0.0000% to each province.

In the last row you must have created the VAT of 21% for the rest of the zones (since they are applied in order).

In this way, when our client’s shipping address belongs to the Canary Islands, Ceuta or Melilla, their product will be exempt from VAT, and otherwise the last row corresponding to the rest of the areas is applied, applying 21% VAT.

Modify taxes in WooCommerce

If you want to modify a tax, simply click on the cells of the table that you must change and modify the values.

Remove taxes in WooCommerce

To delete a tax, you only have to select its row (it will change the background color of the line to yellow) and click on the button. Delete selected row(s).

Associate taxes to each product in WooCommerce

When you have already configured the tax classes and the corresponding taxes, you can configure the tax class that applies to them in the products.

By default, it will appear with the tax status “Taxable” (taxes are applied to that product) and the tax class “Standard”.

To associate each product to its corresponding tax class, you must do it from the product file (by accessing edit the product from the menu of Products -> All the products).

When you are editing the product sheet, go to the Product dates -> General and there select, in the field of tax class the appropriate class for this product:

Click on image to enlarge

Remember that you should always save the changes applied by clicking on the button To update on the product sheet.

Associate taxes to a product block in WooCommerce

You can also bulk assign a tax class to all or some products.

To do this, go to Products -> All the products and select all the products for which you want to associate a tax class.

You can select all, or just some.

Once marked, select Edit in the bulk actions dropdown and click the button Apply.

Click on image to enlarge

A series of fields will be displayed to apply batch modifications to all the selected products. go to the field of tax class in the…