Manage VAT Settings for Square Online Orders
Taxes for online sales can be confusing, especially if you receive orders from various locations. With Square Online, setting up and managing your online tax settings has never been easier.
The amount of sales tax 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.
Note: Tax settings from your Square account do not sync to Square Online.
Learn more about other Square Online settings beyond taxes.
Create Tax Rates
Taxes for most countries (except the US and Canada) are charged at the country level only, and must be created manually. The tax rates should be configured based on where the buyer of the goods or services is located.
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 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.
Troubleshooting
If you don’t see your tax settings appear on your Square Online site, there are a few things to consider that could be the cause:
Taxes are included in your item prices: Be sure the Taxes are included in item prices option isn’t ticked if you don’t want them included.
Items are marked as tax-exempt.
The website hasn’t been republished: Any time you update tax settings, a good practice is to republish your website from the Square Dashboard.
DISCLAIMER: Although we’ve built a powerful tax calculation system for Square, Square can’t offer any tax advice or consultation services. Tax compliance is your responsibility. We do not guarantee the applicability or accuracy of our tax tools. If you’ve any questions about your tax obligations, consider consulting a professional tax advisor.