How to charge UK VAT with Pro Sites?

I believe the correct way to set the pricing in Pro Sites is to use exclusive of VAT prices then set up the standard VAT rate in PayPal for UK residents. Is this correct?

  • Spencer

    Every SaaS website in the UK that I've seen makes it standard practice to display their prices as exclusive of VAT and then charge the VAT upon billing with a proper tax invoice or receipt.

    If we were to show our prices as inclusive of VAT it would present two problems as follows:

    1) In conjunction with the Affiliates plugin, the commission should be calculated as Net not Gross i.e. exclusive of VAT.

    2) PayPal does not do a full tax summary on its payment receipts unless a % for VAT was sent through by the originating site i.e. whether we do exclusive or inclusive of VAT, the end user will not receive a proper tax receipt.

    I believe that Pro Sites needs to send a VAT % somewhere for the creation of a proper VAT receipt sent by email from PayPal.

  • Spencer

    In response to my own response I've discovered that the only real workaround that may work for us is to:

    1) not use PayPal at all since it won't create proper sales tax receipt emails,
    2) to price up the sites as inclusive of VAT,
    3) use the manual payment option to set up GoCardless payment links on the plans page
    4) on receipt of direct debit payment(s) extend a site by 30 or 365 days (we're ignoring the quarterly option for simplicity)
    5) repeat #4 as appropriate each month/year
    6) configure the receipt notification email to have the correct details applicable for VAT i.e. our UK VAT number and clear statement that prices have had VAT already applied which the receiving business can claim back if applicable.

    As for the affiliate payouts which should be NET and not GROSS of the amount i.e. exclusive of VAT we can simply deduct 20% (current UK VAT rate) from all payouts before making them using PayPal MassPay.

    Furthermore, in the future we may consider getting a freelance developer to do custom work on the plugin to make the GoCardless integration native to the plug in using their API for proper notifications to the plug in in case of cancellations, upgrades, etc.

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