Open Orders: Calculations

Linnworks order management and stock control system can automatically recalculate applicable order tax. The system is able to calculate taxes as:

OpenOrders Calculations

Inclusive tax 

The tax is already incorporated into the final advertising cost of a product. For example, if you sell the product for €100 and the tax rate of 25% is already included in the price the actual cost of the product without tax is €80 for which you charge 25% (€80 * 0.25 = €20) tax yielding a final cost of the product €100.

Exclusive tax 

This means that your product selling prices do not include tax and you add the tax on top of the product cost at the point of sale.

All orders downloaded from a channel (Amazon, eBay, Etsy, a website, etc.) by default are inclusive of a tax. For some channels, there is also an option in the order section of the channel config to Use Channel Tax instead of Linnworks back calculating the tax on the order.

For direct orders, it is possible to set the system to calculate tax as inclusive or exclusive here.

Line tax: channel orders

For channel orders, each line is calculated presuming that product prices are inclusive of tax.

Example: Product A

Line total £5
Tax Rate 20%
Line Tax 5 - (5/1.2) = 0.83
Line Total (Ex Tax) 5 - 0.83 = 4.17

Line tax: direct orders

Direct order unit costs can either be inclusive or exclusive of tax. The option can be found in Settings > Application Settings > Direct Orders - tax is inclusive of the item price. If ticked then the Line totals will be calculated in the same method as Channel/Website Orders, else it will be calculated in the following fashion.

Example: Product A

Line total £5
Tax Rate 20%
Line Tax (5*1.2)-5 = 1
Line Total (Ex Tax) 5

Linnworks retrieves the tax rate based on the location of the order (where it was placed), the item's default tax rate, and the country of the order.

Scenario 1 Scenario 2 Scenario 3
Current Location: UK Current Location: UK Product B has a set tax rate instead of taking the default one for each order.
Customers Country: UK Customers Country: US Product B Tax Rate:5%
UK tax rate: 20% US tax rate: 10%  
Result: when Product A is added to the order the Tax Rate will be 20%. Result: when Product A is added to the order the Tax Rate will be 10%. Result: the Tax Rate will be 5% regardless of location or customer's country.

Postage tax

The tax on postage is calculated based on the country of the customer.

Example:

UK tax rate 20%
Postage cost (ex tax) 2.99
Postage Tax 0.50

Discount

The order discount is backward calculated from the line total, removing the tax. This is the most accurate way of calculating discount rates.

Example

Discount 5%
Line Total £10
Tax Rate 20%
Calculation
  1. 10/1.2 = 8.33
  2. 8.33-(8.33*0.05) = 7.91
  3. 7.91*1.2 = 9.50

Order subtotal

The order subtotal is calculated based on all line costs (ex. tax) excluding the tax for postage.

Order total tax

The total tax for the order is calculated by the addition of each line's tax plus the tax for the postage. 

Order total

The order total is calculated as a sum of Subtotal, Postage Cost (ex. Tax), and Total Order tax.

Subtotal Postage Cost (ex. Tax) + Total Order Tax = Order Total