Renewal Time VAT taxes issue for sign ups prior to Taxamo being switched on

Hello,

I did not realise I had to charge VAT until I already had some members signed up.
I have swallowed the Tax costs for these members first billing period (3mths) but they are coming up for renewal...wil they be charged with thee TAX added now? If not how can I solve this problem?

Thanks,

Dre

  • Adam Czajczyk

    Hey Dre,

    I hope you're well today and thank you for your question!

    The necessity to pay taxes isn't an issue related to our Membership 2 Pro plugin but to a fiscal policy of the country you're doing business in. I took a look a t your site and I assume this would be Great Britain.

    Although I'm located somewhere else, I've checked the rules and I'm pretty sure that you need to pay Value Added Tax for each transaction regardless of it being the first time payment for membership or the renewal.

    You can find more information on this here:

    https://www.gov.uk/vat-rates

    I hope that helps. If I'm missing something here, please let me know!

    Cheers,
    Adam

  • Dre

    Hello @Adam Czajczyk , that is not what I am asking.

    I know I have to pay VAT, and I have switched on Taxamo many weeks ago and now the membership to my site is $99+VAT
    But I have some members that paid $99 without having tax added to this amount.
    Will these people be charged $99+VAT at the next cycle or will they still be charged $99 effectively making me take the hit for the VAT ?

  • Adam Czajczyk

    Hey Dre,

    Thanks for this explanation and I'm sorry I misunderstood you at first.

    The issue here is that Taxamo/Membership 2 plugin isn't adding a tax value to the price you've setup for membership, right?

    This would mean that you have to pay VAT from your income without charging members. This isn't of course the way it should be. That being said, could I have a closer look at your setup? To do this I'd need to access your dashboard so could you please grant me a support access?

    To do so, please follow this guide:
    https://premium.wpmudev.org/manuals/wpmu-dev-dashboard-enabling-staff-login/

    Thanks,
    Adam

  • Dre

    Sorry I don't think I have explained it right as that is still not correct.

    The system is working fine. It is adding tax perfectly fine at this point.

    I however did not have it switched on at the beginning of my site launch.
    This has resulted in some members paying a price that is lower than what I would want it to be as I will need to take the hit for their Tax amount.

    What I need to know is if these people that got charged a particular amount prior to me switching on Taxamo will be charged the newer Tax added amount when their next payment comes due OR if they will be charged the same amount they were charged when they first signed up.

  • Predrag Dubajic

    Hi Dre,

    Apologies for the delay on this thread.

    I believe that when you enable taxes after the member has already paid his first subscription his next payment will be the same and will not have VAT included.

    I'm not 100% sure about this so let me ping developer @Philipp Stracker in here so he can give us his opinion on this one.
    And just to sum it up for him this is the question:
    Let’s say you have monthly recurring membership which is $10, member comes, pays for first month and after that you enable taxes.
    Now, when next payment is due, will member pay $10 or $10 + taxes?

    Best regards,
    Predrag

  • Dre

    @Philipp Stracker & @Predrag Dubajic

    any updates? This is getting urgent as there is going to be over 100 users due for renewal within the next few days and the system does not seem to be working.

    And if Tax will nit be included by default what can we do? I can't even identify who would be affected I would need to blankedt cancel over 100 memberships for the period where Taxamo add-on was not active.

  • Philipp Stracker

    Hi Dre,

    I just checked your site/setup and I'm sorry to tell you that there only way to charge the tax in future is, if the member unsubscribes and re-subscribes to the membership with the new price (= price + taxes)

    The problem here is, that the payment gateways are made in a way that prevents charging anything else than what was authorized by the user. So if the user authorized a Stipe Subscription of 99 $ then Stripe wants to protect the user by "locking" that subscription from modification. Only way to change the subscription is to delete it and create a new one.

    Only users that signed up after you set up the Taxamo Add-on obviously get billed the correct amount, including taxes. Also users that signed up to the recurring plan on your site using the Stripe SINGLE gateway will get a current bill every 3 months (they need to confirm every payment)

    Sorry to say that I found no way of adding taxes to an existing subscription in the API or the Stripe dashboard.

    To locate members that are not paying taxes:
    1. As mentioned above you only need to find Members that use the Stripe Subscriptions gateway (Stripe Single will auto-correct)
    2. To locate those members use the billings page and check the invoice amount value. People paying 99 $ do not pay taxes

    Use this URL to get a list of all stripe subscriptions ordered by invoice amount:
    .../wp-admin/admin.php?page=membership2-billing&gateway_id=stripeplan&status=paid&orderby=total&order=asc
    I saw roughly 70 invoices that match the above criteria.

    I hope this helps to locate and handle the tax issue. If there's anythign else please let us know and we'll see how we can help out :wink:

    Thanks, Philipp

  • Dre

    Hey @Philipp Stracker thanks for that detailed explanation.

    My next query then is....

    All my members with the incorrect Tax made their payment on the Single gateway as the plugin did not have the subscription ability at the time that I launched the site.

    I have disabled the Stripe Single Payment Gateway inside the payment types available for my main membership after the subscription option became available (this was already some time after taxamo add-on was activated)

    This should result in the users being switched to subscription when they are next required to issue a payment (at the end of their current billing period) correct?

    Will this new transaction force a Taxamao check and correctly bill them the right Tax?

  • Philipp Stracker

    Hi Dre,

    yes, this is correct.

    At the end of the current subscription period all users with the Single gateway will see a new unpaid invoice that needs their confirmation before it's paid.
    This new invoice that is generated already contains the correct tax - the single gateway will always generate a fresh invoice using all the current membership details/settings and also let the user review and change their tax details.

    Since you disabled the Single gateway for the membership the only way they to pay the invoice is by using the Subscriptions gateway, which will register the current tax-value and automatically charge the total amount (including taxes) every 3 months from them.

    In this case I think your subscriptions will gradually correct themselfs without you needing to do anything.

  • Adam Czajczyk

    Hello Dre,

    I hope you're well today!

    QUESTION: can I set up a payment or subscription for a User in Stripe itself and Link it to a membership within my site?

    You mean like billing user directly from stripe and giving him an individual link to "confirm" payment? This wouldn't be possible as there's more data sent to a plugin than just a simple link. I think you could though charge a member directly via Stripe and then - which is a bit unfortunate - manually activate/extend user's membership.

    Cheers,
    Adam