Same price regardless of VAT rate - you should be aware of this

You have the option to enable a feature on your products called "Same price regardless of VAT rate".

It can be effective if you want your products to cost the same for all customers, regardless of which country they buy from.

But you should be aware that this is an ALPHA feature. There is therefore a risk that some things may not work exactly as expected. Always thoroughly test your webshop (product page, purchase process, transactions, accounting software, etc.) when you use this option. The feature also comes at the expense of some other possibilities that you may not want to give up.

How does it work?

When this feature is enabled on your product, the product's "Price excl. VAT" field will indicate the price that your customers must pay. Regardless of which country they come from.

If you enter 80 DKK in the "Price excl. VAT" field, the customer will therefore always have to pay 80 DKK for the product.



A private customer from Denmark, who pays 25% VAT, must pay 80 DKK.
A business from Australia, which pays 0% VAT, must pay 80 DKK.

The first customer pays 64 DKK for the product and 16 DKK in VAT. The second customer pays 80 DKK for the product and 0 DKK in VAT.

This also means that your own margin on the product varies depending on the VAT rate you have to charge the customer. In the above example you must pay the 25% VAT to the state when you sell to Danish private customers. Thus you actually only earn 64 DKK on the first customer, whereas you earn 80 DKK on the second customer.

You CANNOT use price-changing features such as B2B prices

When this feature is enabled, you cannot use B2B price overrides.

So you must be completely sure that you will not need these price-modifying features.

(It is possible to use promotions, discount codes and quantity discounts, but you should test this thoroughly if/when you activate these two discount types. They are not officially supported, and there is therefore no guarantee that they will work as intended.)

High risk of uneven prices due to rounding

When this feature is enabled, it effectively means that your price excl. VAT is variable. And this can create challenges in creating nice, round prices.

Example:

Your fixed price for all customers is set to be 640 DKK.

To achieve this, the system must charge different amounts excl. VAT from your customers, depending on the VAT rate they have to pay.

A Danish private customer (25% VAT) must pay 512.00 excl. VAT.
But a German private customer (19% VAT) must pay 537.8151260504202 excl. VAT.

Since all shop systems, payment gateways and accounting programs work with 2 decimals, the German customer ends up paying 537.82 excl. VAT.

And because prices without VAT are the applicable/dominant ones, the system must derive the customer's final price from this. It becomes 537.82 * 1.19 = 640.0058 which is rounded to 640.01 incl. VAT.

So the German customer now pays 640.01 DKK while the Danish customer pays 640.00 DKK.

If a customer buys many units of the same product, the problem can be multiplied. A cheaper item bought in 1000 units can result in differences of many DKK on the final order.

There is no clever or universal solution to this rounding problem. But you can choose to adjust your prices slightly so that neat, round numbers are produced for the VAT rates your webshop uses.

A price of 645 will, for example, create neat prices for both 25% and 19% VAT.

Product feeds and local prices/VAT rates

By default, product feeds will show prices based on the webshop's primary VAT rate.

If you sell, for example, to Germany (and with their local 19% VAT), and you are also using "Same price regardless of VAT", it may be advantageous to use a product feed that takes this into account.

You can achieve this by adding "?vat_percentage=19" to your feed's URL.

This will mean that the feed contains the same prices (including rounding) as shown in your webshop.