VAT WAT - Value Added Taxes in Spree and Solidus

As a merchant, you want to play nice with local authorities and correctly calculate whatever taxes apply to your merchandise. SpreeCommerce and Solidus have a strong history and good support for US-American style sales tax, but the support for Value-Added Tax as used in many regions in the world has been a little sketchy.

Transcript

1. VAT WAT The long and winding story of VAT in Solidus and Spree
2. Martin Meyerhoff Developer with bitspire, creators of AlchemyCMS kiosk.brandeins.de - lots of VAT craziness Rebuilt Spree / Solidus’ taxation system … 3 times Solidus core member
3. A consumption tax Relevant for e-commerce USA / Canada: Sales Tax Rest of the World: VAT / GST What's VAT?
4. nunuShirts 1: nunuShirts buys a Shirt Nunu Shirts buys T-Shirts for 10 € incl. 10% VAT: Net price: 10 / (1 + 10%) = 9.09090909 ≈ 9.09 Included VAT: 0.81 Price: 10
5. nunuShirts 2: nunuShirts sells a shirt Nunu Shirts sells T-Shirts for 25 € incl. 10% VAT: Net price: 25 / (1 + 10%) = 22.72727272 ≈ 22.73 Included VAT: 2.27 Price: 25
6. nunuShirts 3: What tax does nunuShirts pay? At the end of the month, nunuShirts pays VAT for the value they add: VAT on revenue: 2.27 - VAT on inputs: 0.81 —————————————————————— = VAT to pay: 1.46
7. nunuShirts 4: nunuShirts sells many shirts Nunu Shirts sells 250 Shirts at 25 € each with 10% VAT: Total: 6250 Net revenue: 6250 / 1.1 ≈ 5681.82 Correct VAT: 6250 - 5681.82 = 568.18 Wrong VAT: 2.27 * 250 = 567.50
8. nunuShirts 4: nunuShirts sells many shirts Nunu Shirts sells 250 Shirts at 25 € each with 10% VAT: Total: 6250 Net revenue: 6250 / 1.1 ≈ 5681.82 Correct VAT: 6250 - 5681.82 = 568.18 Wrong VAT: 2.27 * 250 = 567.50
9. nunuShirts 5: nunuShirts sells a Shirt to the USA USA is outside the EU nunuShirts sells at net price (22.73) Total: 22.73 Net revenue: 22.73 Correct VAT: 0
10. nunuShirts 5: Displaying prices Prices have to be displayed including VAT on PDPs No surprises at checkout They also have to detail percentage OR included tax amount Good: 25.00 € incl. 10% VAT Good: 25.00 € incl. 2.73 € VAT Bad: 22.73 + VAT Bad: 25.00
11. nunuShirts 5: Displaying prices Prices have to be displayed including VAT on PDPs No surprises at checkout They also have to detail percentage OR included tax amount Good: 25.00 € incl. 10% VAT Good: 25.00 € incl. 2.73 € VAT Bad: 22.73 + VAT Bad: 25.00
12. Which rates apply? Sale inside EU: Warehouse VAT rate
13. Which rates apply? Sale inside EU: Warehouse VAT rate Export outside EU: none
14. Which rates apply? Sale inside EU: Warehouse VAT rate Export outside EU: none Sale inside EU, lots of $$: Customers country VAT
15. Which rates apply? Sale inside EU: Warehouse VAT rate Export outside EU: none Sale inside EU, lots of $$: Shipping address country VAT Sale inside EU, digital goods: Shipping address country VAT
16. Taxes in Solidus (basic) Variant Tax Category Tax Rate Zone Country/State
17. Taxes in Solidus (basic) Variant Tax Category Tax Rate Zone Country/State Shirt Clothes Most things 19% VAT Europe Germany
18. Sales tax in Solidus Spree::LineItem amount: 25.0 additional_tax_total: 2.5 total: 27.5 Spree::Adjustment source: "Spree::TaxRate" included: false
19. VAT in Solidus Spree::LineItem total: 25.00 included_tax_total: 2.73 amount: 25.00 Spree::Adjustment source: "Spree::TaxRate" included: true
20. The VAT export hack Solidus has one price per variant No dynamic changing of price depending on circumstance What do we do?
21. The VAT export hack # This method is used by Adjustment#update to recalculate the cost. def compute_amount(item) if included_in_price if default_zone_or_zone_match?(item.order.tax_zone) calculator.compute(item) else # In this case, it's a refund. calculator.compute(item) * - 1 end else calculator.compute(item) end end
22. The VAT export hack # This method is used by Adjustment#update to recalculate the cost. def compute_amount(item) if included_in_price if default_zone_or_zone_match?(item.order.tax_zone) calculator.compute(item) else # In this case, it's a refund. calculator.compute(item) * - 1 end else calculator.compute(item) end end
23. The VAT export hack def adjust(order_tax_zone, item) amount = compute_amount(item) return if amount == 0 included = included_in_price && default_zone_or_zone_match? (order_tax_zone) if amount < 0 label = Spree.t(:refund) + ' ' + create_label end self.adjustments.create!({ :adjustable => item, :amount => amount, :order_id => item.order_id, :label => label || create_label, :included => included }) end
24. The VAT export hack def adjust(order_tax_zone, item) amount = compute_amount(item) return if amount == 0 included = included_in_price && default_zone_or_zone_match? (order_tax_zone) if amount < 0 label = Spree.t(:refund) + ' ' + create_label end self.adjustments.create!({ :adjustable => item, :amount => amount, :order_id => item.order_id, :label => label || create_label, :included => included }) end
25. The VAT export hack We now have: - an additional adjustment - from a VAT rate that's included_in_price - whose amount is negative. Yummy. Where does this lead to?
26. The VAT export hack: Consequences def display_price price = display_base_price.to_s if tax_rate tax_amount = calculate_tax_amount if tax_amount != 0 if tax_rate.included_in_price? if tax_amount > 0 amount = "#{display_tax_amount(tax_amount)} #{tax_rate.name}" price += " (#{Spree.t(:incl)} #{amount})" else amount = "#{display_tax_amount(tax_amount*-1)} #{tax_rate.name}" price += " (#{Spree.t(:excl)} #{amount})" end else amount = "#{display_tax_amount(tax_amount)} #{tax_rate.name}" price += " (+ #{amount})" end end end price end
28. Solution: Store prices per country We unlink pricing from taxation No more Franken-Adjustments Prices know where they apply Speed Speed Speed Bonus: This yielded an API for customizing pricing in general
29. The terrible, terrible `default_zone` • A boolean on the spree_zones table • "The zone whose taxes are assumed to be inside all prices" • "The tax zone of an order that has no address" • Hopefully a zone created for taxation (not shipping)
30. The terrible, terrible `default_zone` • A zone has_many members • Order has a zone • Tax rate has a zone • Now we have to see whether ALL order zone members are inside any tax rate zones
31. The terrible, terrible `default_zone` # Returns the relevant zone (if any) to be used for taxation purposes. # Uses default tax zone unless there is a specific match def tax_zone @tax_zone ||= Zone.match(tax_address) || Zone.default_tax end # Returns the address for taxation based on configuration def tax_address Spree::Config[:tax_using_ship_address] ? ship_address : bill_address end def reload(options=nil) remove_instance_variable(:@tax_zone) if defined?(@tax_zone) super end
32. The terrible, terrible `default_zone` # Returns the relevant zone (if any) to be used for taxation purposes. # Uses default tax zone unless there is a specific match def tax_zone @tax_zone ||= Zone.match(tax_address) || Zone.default_tax end # Returns the address for taxation based on configuration def tax_address Spree::Config[:tax_using_ship_address] ? ship_address : bill_address end def reload(options=nil) remove_instance_variable(:@tax_zone) if defined?(@tax_zone) super end
33. The terrible, terrible `default_zone` # Returns the matching zone with the highest priority zone type (State, Country, Zone.) # Returns nil in the case of no matches. def self.match(address) return unless address and matches = self.includes(:zone_members). order(:zone_members_count, :created_at, :id). where("(spree_zone_members.zoneable_type = 'Spree::Country' AND spree_zone_members.zoneable_id = ?) OR (spree_zone_members.zoneable_type = 'Spree::State' AND spree_zone_members.zoneable_id = ?)", address.country_id, address.state_id). references(:zones) ['state', 'country'].each do |zone_kind| if match = matches.detect { |zone| zone_kind == zone.kind } return match end end matches.first end
35. Solution: Matching addresses to zones Much Simpler. Spree::Order # Returns the address for taxation based on configuration def tax_address if Spree::Config[:tax_using_ship_address] ship_address else bill_address end || store.default_cart_tax_location end Spree::TaxRate # Finds all tax rates whose zones match a given address scope :for_address, ->(address) { joins(:zone).merge(Spree::Zone.for_address(address)) }
36. Solutions: Many more things Persisted shipping rates Separate business and taxation logic Better i18n More consistent naming of columns (`amount` everywhere)
38. Outlook Extract taxation from core Define high-level API for taxation Limit API calls to Avalara/TaxCloud for US friends
39. Thx Martin Meyerhoff @mamhoff martin.meyerhoff@bitspire.de Works with bitspire https://bitspire.de/en/home Come to my workshop!