Core concepts

Tax

In the merchant of record model, Merxian calculates the VAT of each sale before the buyer pays. In the payments model, Merxian calculates no tax.

On this page

When Merxian calculates tax
How Merxian decides the VAT
Prices with or without tax
What Merxian needs from the buyer
Tax on the transaction
Returns

When Merxian calculates tax#

Tax calculation belongs to the merchant of record model. In the payments model, taxStatus is not_applicable and you keep your own tax setup.

How Merxian decides the VAT#

For each line, Merxian uses:

the country of the buyer,
the product and its tax code, from the catalog,
a business VAT ID, when the buyer gives a valid one.

Merxian holds VAT rates for the 27 EU countries, the United Kingdom, and Monaco. It records the evidence of the buyer’s location with the sale. For a qualifying business sale to another EU country, Merxian validates the VAT ID and applies the reverse charge. The buyer then accounts for the VAT, and the invoice records why VAT was not charged.

Prices with or without tax#

Each price says whether its amount includes tax. taxBehavior on the line shows it:

`taxBehavior`	Meaning
`exclusive`	Merxian adds the VAT to the unit amount.
`inclusive`	The unit amount includes the VAT. Merxian splits it out.

What Merxian needs from the buyer#

Tax needs the buyer’s country. Until Merxian has it, taxStatus is pending and amounts.tax has no final result. On hosted checkout, the buyer gives the details on the page. You can also send them:

Field	Where
`buyer.country`, `buyer.customerType`, `buyer.vatId`	Create or update a transaction
`billingAddress`	Create or update a transaction
`customerCountry`	Create a checkout session

When Merxian issues the invoice for a transaction, the transaction needs a billing address before it can be finalized. Without it, finalize returns 422 with the code invalid_transaction.

Tax on the transaction#

Field	Meaning
`taxStatus`	`not_applicable`, `pending`, or `calculated`.
`amounts.tax`	The tax of the transaction, in minor units.
`lineItems[].tax`	The tax of each line.
`lineItems[].taxCode`	The tax code applied to the line.

Finalize freezes the tax result. After that, the tax does not change.

Returns#

At the end of each period, monthly or quarterly, Merxian totals qualifying sales by country and rate, and prepares the One-Stop Shop return (Union scheme). Filing the return is a separate step. One-Stop Shop returns cover EU countries only.