Tags/topics: 
Tax
VAT
Rules
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What is the recommended tax setup for VAT per product type?

This is probably one of the most common EU VAT requirements, but I haven't found much 'official' documentation for this setup. It seems there are two solutions:

1) For each individual product, use the "Include tax in this price" option, and disable the default rule "Calculate taxes: VAT".

2) Configure conditional VAT rules. I haven't found any guidelines for this particular condition. The following seems to work, is this correct?
Configure the component for your VAT tax (admin/config/workflow/rules/components), add a condition "Order contains products of particular product types"; data selector "commerce-line-item:order"; select the product types for this tax rule, and leave operator ">=" and value "1".

Are there any particular advantages or disadvantages to either setup?

Asked by: Arjan
on June 11, 2013

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Option 1 is a great solution if you are a small business only selling inside the EU and do not go over the distance selling threshold to another country.

If this is not the case and you sell digital product and/or ship outside the EU (remember Switzerland, Norway and Jersey are outside the EU), or if you do business to business transactions and need to offer reverse charge then you should consider the Commerce European Union VAT module (commerce_eu_vat).

David Kitchen
Answer by: David Kitchen
Posted: Jun 20, 2013