Tax model

Background

The Integration Platform supports transporting information for two major tax systems, related to the sale of goods and services, in the world. These tax systems affect businesses operating locally in the countries that use them. The platform supports both Value Added Tax (VAT) and Sales tax which means that sales information that features either VAT or Sales tax is possible to transport through the infrastructure and Connections. Below you’ll find an overview of the two tax systems and some significant differences between them.

Supported tax systems

VAT (Value Added Tax)

Value Added Tax, or VAT, is a tax on the value added to a product, for example when a company buys products and sells them at a higher rate. The tax applies to the value increase itself. This applies to every transaction for the product in the entire chain, from producer to end consumer. All countries in the EU and a large part of the world use this system. Manufacturers, suppliers, distributors, and retailers all add VAT to taxable sales.

Sales tax

Sales tax applies only to the final sale of a product. The US is using this tax system. Tax is added by the retailer at the last point of sale in the supply chain. A major difference in this system compared to VAT is that no tax income is generated before the final sale. In the US, every state has their own tax rate, which means that significant differences occur depending on where in the country a business is located.

Comparison	VAT	Sales tax
Tax is generated	Any time the value of a product is increased and the product is sold.	During the final sale of a product to the end consumer, based on the final value of the product.
Tax rates	Every country has their own, typically a handful of different rates.	Each state in the US has their own; one or several rates depending on the state, municipality and city.
Tax liability	Distributed among all sellers in the chain.	The final seller toward the end consumer.

Technical details

Field descriptions

vatType

The field is used if VAT is applicable for the sale. The vatType can be one of the following:

DomesticVendorResponsible

A domestic sale where the vendor/merchant is responsible for registering and paying the VAT.

DomesticCustomerResponsible

A domestic sale where the customer is responsible for registering and paying the VAT.

EUVendorResponsible

A sale within EU where the vendor/merchant and the customer are located in two different EU countries AND the vendor is responsible for registering and paying the VAT.

EUCustomerResponsible

A sale within EU where the vendor/merchant and the customer are located in two different EU countries AND the customer is responsible for registering and paying the VAT.

ExportNoVat

A sale to a foreign country where no VAT is applied.

ProfitMarginTaxation

Can be applicable if the vendor sells e.g second-hand goods and the vendor does not charge VAT when purchasing the goods. This is called Profit Margin Taxation or PMT.

TaxationItem

The fields below are also described in the TaxationItem model in the Swagger API reference.

taxType

contains a tax type which is enum with possible values vat or salestax

label

contains a string that describes the tax in human-readable format.

percentage

for the tax rate. The rate is a string where the value 25.0 is used to represent a 25% tax rate.

taxableAmount

contains a Money type that represents the amount that is used to calculate the tax.

tax

contains a Money type that represents the actual tax value.

customData

contains auxiliary unstructured data, see the section Custom data

Anatomy by examples

Using Order as an example and where Order row and its per unit prices.

VAT example

{
    "taxType": "vat",
    "label": "Describe the tax",
    "percentage": "25",
    "taxableAmount": {
        "currency": "SEK",
        "amount": "100.00",
        "decimals": 2
    },
    "tax": {
        "currency": "SEK",
        "amount": "25.00",
        "decimals": 2
    }
}

Sales tax example

{
    "perUnitTaxes": [
        {
            "taxType": "salestax",
            "label": "Describe the tax",
            "percentage": "9.25",
            "taxableAmount": {
                "currency": "USD",
                "amount": "100.00",
                "decimals": 2
            },
            "tax": {
                "currency": "USD",
                "amount": "9.25",
                "decimals": 2
            }
        }
    ]
}