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Taxes

Enabling tax calculations on your checkouts was never easier. Keep reading to learn how it works for your store!

How it works?

Managing taxes correctly is essential for staying compliant and avoiding unnecessary penalties. That’s why Subbly offers three flexible solutions to help you handle sales tax effectively based on your business needs and location:

  • Built-in Subbly tax calculator
  • Integration with TaxJar
  • Manual setup of tax regions

Getting started is easy. Simply enable tax settings for your store directly from your Subbly admin panel, and we'll automatically take care of calculating the appropriate taxes at checkout based on your business address and your customer’s location—using sales tax nexus rules.

Sales tax nexus refers to the connection between a business and a state or local jurisdiction that obligates the business to collect and remit sales tax on sales made to customers in that area. In practice, this means that if your customer is located in a region where you have a registered tax nexus, Subbly will automatically calculate and apply the correct tax rate at checkout.

Want more control? You can also define your own custom tax regions using Subbly’s Tax Region feature, giving you the flexibility to tailor tax rules based on where you operate.

Since Subbly handles tax logic based on both merchant and customer locations, it’s important to ensure that your business address is correctly set on your account page, and that customers provide accurate country and state information during checkout.

This guide will walk you through each of the three available solutions, when to use them, and how to configure them to stay compliant and run your business smoothly.

Having a different country of trade than the store account address won't make any interference with taxes being added on the checkout. 

Built-in Subbly tax calculator

VAT included in the price or VAT on top of the price? Which one should I use?

Just below the Tax Enabled toggle in your Admin, there's an additional option to Include VAT in price:

Choosing VAT in price means your product price already includes the tax amount, so when calculating taxes, the total to be paid will not increase for your customers:

On the other hand, if you do want to charge VAT on top of the product price, then you must keep the Include VAT in price toggle disabled so the tool calculates taxes in addition to the price set for the product:

The Digital Product Tax Collection option works for digital/membership subscription products where the shipping address is not required at the checkout, however, for the tax to be calculated, make sure that you are enabling the "Collect billing address" toggle in the Settings > Advanced section:

Also, enabling the option to collect the "Shipping address" for the digital type of a subscription product in the Extra Settings on the product creation page:

Will enabling a tax calculator affect my current customers?

If you choose to enable the tax settings when you already have active subscribers, this will affect your existing customers as well for the future payments. 

How to export taxes collected? 

You are able to export all your transactions at any point from here within your admin. Refer to this article for further information.

TaxJar integration

Only if you need a more comprehensive way of calculating taxes because:

  • of the type of goods you sell
  • you have a significant presence or sales tax nexus in more than one state or country
  • or simply because you want more advanced functionalities

Then you should consider using our TaxJar integration instead of our built-in calculator as the former will better adapt to your business taxation requirements. You can see how to set up the TaxJar app here.  

Passing product tax code to Taxjar

If you're based in the US and you need to be able to pass specific product tax codes over to Taxjar for more precise tax calculation, don't forget that you can choose the product tax type from inside the product creation widget under Extra settings as seen down below:

Setting up tax regions

It is now possible to create your own tax rates for your store and add separate tax rates for each state in the USA or globally.

The tax rate consists of 3 different options for taxing:

  • Default tax rate
  • Shipping tax rate
  • Product group tax rate

You can create a default tax rate for all states in the USA like in this example here:

Or even create a tax rate for only one state and only one product:

You can have an unlimited number of tax regions, and publish them or unpublish them as per your needs:

This feature is only available on the Subbly, Advanced, and Subbly-X plans.

Important considerations

Here are key things to keep in mind when configuring taxes on Subbly:

  • TaxJar Pricing: Using TaxJar involves additional costs, starting from a base plan and increasing your transaction volume. Check TaxJar's pricing for details.
  • Digital Product Tax: Digital goods often have different tax rules depending on the location. If using TaxJar, assign the correct product tax code to ensure accurate handling.
  • Product Tax Codes: TaxJar relies on product tax codes for categorization. Failing to assign the right code may lead to incorrect tax collection.
  • Business Address Matters: Your business address must be located in the country where you’re trading. Otherwise, taxes may not calculate correctly during checkout. However, that is why we introduced Tax Regions where you can add your own tax rules inside Subbly Admin.
  • Tax at Checkout:
    • Taxes can be displayed as included in product prices or added at checkout.
    • Example: A product priced at $20 with 10% VAT can either display as $20 (VAT included) or show $20 + $2 tax at checkout.

You can toggle VAT-inclusive pricing from Settings > Taxes, depending on how you want your pricing to appear to customers.

By choosing the right tax setup for your business, you can ensure compliance and simplify the buying experience for your customers. If you're unsure which method to choose, start with the built-in calculator and scale up with TaxJar or manual regions as your business grows. 

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