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VAT Calculation (Add-on)

VAT Calculation (Feature Guide)

Introduction

The VAT Calculation feature lets you enable and configure VAT settings for both the merchant and vendor sides of your marketplace. Once activated, it affects how VAT is handled across settings, order processing, and vendor payout management.

This article walks you through:

  • How to enable and configure VAT for merchants and vendors
  • Key scenarios showing how VAT is applied in payouts
  • Where you can view VAT breakdowns in the system

Merchant Setup

To enable VAT for the merchant:

  1. Go to Settings → Merchant Profile → Billing & Invoice.

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  1. Tick “Enable VAT”.
VAT 2
  1. After enabling, you’ll see three fields appear:
    • VAT No.
    • NIF No.
    • VAT Rates.
VAT 3
  1. Click add VAT Rates, then:
    • Select the relevant country.
    • Assign the VAT rate for that country.
VATTTT


  1. Scroll down and click Save.

Note: Until the VAT rate is configured for a country, VAT will not be applied for transactions from that country.

Vendor Setup

Each vendor needs to set up their VAT configuration separately:

  1. The vendor navigates to Settings → Vendor Profile → Billing & Invoice.
VAT 155
  1. Tick “Enable VAT”.

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  1. Enter the vendor’s VAT Number.
  2. Scroll down and click Save.

How VAT Works — Key Scenarios

Here are the main scenarios you should be aware of when the VAT feature is enabled:

  • Scenario 1: Merchants have enabled VAT, but a vendor has not.
    • Result: For orders of that vendor, VAT will not be deducted from commission, and VAT will not be added to the vendor payout.
  • Scenario 2: Both merchant and vendor have enabled VAT.
    • Case 2a: Customer places an order from a country for which a VAT rate is configured.
      • Result: VAT will be deducted from the commission. VAT will be added to the vendor payout according to the rate assigned for that country.
    • Case 2b: Customer places an order from a country for which no VAT rate has been configured.
      • Result: VAT will not be deducted from the commission, and VAT will not be added to the vendor payout.

Where to View VAT in Payouts

To review the VAT component in a payout:

  1. Go to Payouts → By Order.
  2. Click on the payout value for the order you want to inspect.
  3. A “Payout Breakdown” popup will appear.
  4. In the ‘D’ column, you’ll see an “i” icon.
  5. Click the icon to view the breakdown of Service Tax and VAT Tax.

Tips & Best Practices

  • Always configure VAT rates for all the countries from which you expect orders to ensure VAT is applied correctly.
  • Ensure vendor profiles have the correct VAT numbers entered to avoid payout discrepancies.
  • Regularly review payout breakdowns to verify VAT and commission deductions.
  • Communicate to your vendors that enabling VAT may affect their payout amounts (due to VAT being added).
  • Note: If a vendor has not enabled VAT, orders for that vendor bypass VAT logic regardless of merchant settings.

Summary

The VAT Calculation feature gives you full control over enabling and configuring VAT rules at both merchant and vendor levels. With correct setup of country‑specific VAT rates, you’ll ensure the feature works smoothly across commissions and payouts.
Ensure all stakeholders (you as merchant + your vendors) know how it works and where to view the results.

If you’re stuck, reach us at team@shipturtle.com or open a ticket on the support page.