Open Orders: Calculations
Linnworks order management and stock control system can automatically recalculate applicable order tax. The system is able to calculate taxes as:
- Calculate and record inclusive/exclusive tax for each order item based on the Default Tax Settings.
- Calculate and record inclusive/exclusive tax for each order item based on the tax rate set for individual stock items.
- Overwrite the specific tax rate for each Region/Country.
- Recalculate inclusive postage cost and record the value in Postage Excluding 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.
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 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 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.|
The tax on postage is calculated based on the country of the customer.
|UK tax rate||20%|
|Postage cost (ex tax)||2.99|
The order discount is backward calculated from the line total, removing the tax. This is the most accurate way of calculating discount rates.
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.
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