Create and manage VAT settings
About VAT settings
In the UK, you can create VAT rates. VAT is charged on things like goods and services, and different types of goods or services may have different VAT rates. With Square, you can apply VAT to your in-person and online sales, and create custom taxes with specific rules.
The amount of VAT charged on a purchase is determined by applying the VAT rate to the total price of taxable items in an order.
Before you begin
You can set all VAT rates through your Square Dashboard or through your Square Point of Sale app. If you have a Square Online account, you can also set your Square Online taxes and international shipping sales from Square Dashboard.
Create VAT rates
You can create VAT rates through the Square Dashboard or the Square POS apps.
- Sign in to your Square Dashboard and select Account & Settings > My business > __VAT.
- Select Create tax.
- Under Details, enter the tax name and rate and select the locations where the rate applies.
- Under Tax application, choose to apply the tax to All current and future taxable items at selected locations or choose Select items to choose specific items to apply the rate to. If an item is set as non-taxable, taxes won’t be automatically applied to the item on any orders across Square Online or Square Point of Sale.
- Toggle on Apply tax to custom amounts to apply the tax to any custom amounts added to the cart.
- Under Tax calculation, choose Additive tax to have tax as a separate line item on customer receipts or Inclusive tax to have tax included in the item price.
- Under Tax exemption, toggle on Add exemption rule to specify when this tax should not be applied.
- Select Save when finished.
- Open your app and select ≡ More > Settings > Checkout > VAT.
- Select the plus icon (+) to create a new tax.
- Enter the tax name and rate.
- Under Tax application, choose to apply the tax to All items and services (current and future) or choose Select items to choose specific items to apply the rate to. If an item is set as non-taxable, taxes won’t be automatically applied to the item on any orders across Square Online or Square Point of Sale.
- Toggle on Apply tax to custom amounts to apply the tax to any custom amounts added to the cart.
- Tap Item pricing and select Add tax to item price to have tax as a separate line item on customer receipts or select Include tax in item price to have tax included in the item price.
- Tap Save.
Charge VAT on shipping and local delivery fees
The amount of VAT charged on an online purchase is determined by applying the tax rate to the total price of taxable items in an order. Depending on business needs, you can include tax in the item price, charge tax on delivery fees and use item-level tax rates for pickup, local delivery and self-serve orders.
To create tax rates:
From your Square Online Overview page, go to Settings > Sales Taxes or Shared Settings > Sales Taxes.
Select Add tax rate.
Select a country from the drop-down menu and enter the Country Tax Rate.
Add a name for the tax rate. This will be shown to your customers.
Select Save when finished.
Note: You can only have one VAT rate on Square Online Store per region.
Configure other tax settings
To exempt an item from VAT in Square Online:
- from your Square Online Overview page, go to Items > Site Items.
- Select an item from your list.
- In the Fulfilment section, tick the box to indicate No VAT applies when selling this item via Square Online or Point of Sale.
- Select Save when finished.
You can also update this setting for multiple items at once using the bulk editing method in Square Online, or for individual items directly from your Square Item Library.
Note: if an item is set as VAT-exempt, VAT won’t be auto applied to the item on any orders across Square Online or Square Point of Sale. Make sure you’ve selected only items that aren’t subject to VAT. For example, in some places, items considered necessities are not taxed. When in doubt, consult a tax adviser.
When VAT is included in item prices, it’s displayed on order receipts as a separate line item (for illustrative purposes), but isn’t added to the total price. To include VAT in item prices:
- from your Square Online Overview page, go to Settings > VAT or Shared Settings > VAT.
- Under ‘Order level VAT settings’, tick that VAT is included in item prices.
When customers purchase an item with VAT included in the price, they’ll see the following on their order receipt:
- Subtotal: Represents the total price of all items in the order and includes any price-inclusive VAT.
- VAT: separates out the VAT from the subtotal to show customers the exact VAT amount paid.
- Total: the total cost of the order, including the subtotal and any additional fees (such as shipping fees) that are applied.
Rules for charging VAT on shipping and delivery fees vary. If you’re not sure what’s required, you should consult with a professional. To charge VAT on shipping or local delivery fees:
- from your Square Online Overview page, go to Settings > VAT or Shared Settings > VAT.
- Under ‘Order level VAT settings’, tick the boxes to Charge VAT on shipping rates or Charge VAT on delivery fees.
Order level VAT rates are applied to online orders by default, but you can choose to override them by applying item level VAT rates for pickup, delivery and QR code orders. These are the same VAT rates used for Point of Sale purchases. To turn on item-level VAT for Square Online:
- from your Square Online Overview page, go to Settings > VAT or Shared Settings > VAT.
- Under ‘Item level VAT rates’, toggle on any item level VAT for pickup, delivery or QR code orders.
- Select Manage item-level VAT to view item-level VAT from your Account & Settings page.
Customers who receive an item-level VAT rate on an order can view a calculation of their VAT during checkout (displayed by VAT name). If a customer selects pickup, local delivery or QR code ordering for an item that doesn’t have an item level VAT rate, no VAT will be applied to the purchase.
Note: dine-in tax rules aren’t applied to online orders.
Disable or delete VAT
You can disable or delete your VAT rates at any time from either your Square Dashboard or Square app. Disabling a tax makes it no longer applicable to purchases. If you delete a tax, you cannot undo the deletion, and you will have to create the tax again.
- Sign in to your Square Dashboard and select Account & Settings > Payment > Sales taxes.
- Under Sales taxes, select the tax you want to disable or delete.
- Select the Actions drop-down menu and select Disable tax or Delete tax.
To disable taxes for shipping and non-physical sales from Square Online:
- Sign in to your Square Dashboard and select Account & Settings > Payment > Sales taxes.
- Select Manage settings.
- In the Shipping and non-physical sales section, select Do not collect taxes.
- To disable taxes on delivery, pickup and QR code orders, select Apply In-person taxes then disable or delete the in-person tax.