VAT, OSS & outside the EU
How VAT is calculated
The rule behind every VAT amount in the checkout: the customer's country, your VAT scheme, the product's category and B2B.
The settings that decide
Under Settings › Tax & VAT:
| Field | Effect |
|---|---|
| VAT scheme OSS | EU customers are charged the destination country's rate. Requires OSS registration with your tax agency |
| VAT scheme Home country only | Always the home country's rate, for sellers under the EU threshold of €10,000 per year |
| B2B reverse charge | On: businesses in another EU country with a valid VAT number get 0 % |
| Default tax category | For products without their own category |
| Countries outside the EU | Export 0 % by default, or destination VAT under a registration (VOEC, UK) |
The rule, step by step
- Delivery country decides. If missing, the home country is used.
- Home country → the home country's rates. The order is domestic.
- EU country → the destination country's rates under OSS, otherwise the home country's. The rate book has every EU country with validity dates, so an old order is calculated against the rate that applied then.
- Outside the EU → 0 % (export), unless you hold a registration in the country. See VOEC and countries outside the EU.
- Business in the EU with a valid VAT number and the B2B toggle on → 0 % and the order is marked as reverse charge. The number is checked against VIES; the answer is cached for 30 days. If VIES is down, VAT is charged.
- The product's tax category picks the row in the rate book: standard, reduced, alternative reduced, super-reduced or zero. If the category is missing in the country, the country's standard rate is used.
Shipping, discounts and rounding
- Discounts are allocated across the lines before VAT is calculated, to the cent.
- Shipping is taxed in proportion to the goods' VAT rates: only 25 % goods give 25 % on shipping; a mixed basket gives apportioned shipping VAT. Kustom receives one shipping line per rate.
- Prices including VAT means the gross price is the same in every country and VAT is backed out at the destination rate. At 0 % the customer pays the gross price without VAT.
What the order stores
Rate, taxable amount and VAT per line, shipping VAT per rate, VAT number and reverse charge, currency, rate and totals in the base currency. Reports never recalculate afterwards.
Case matrix
| Customer | The checkout charges | Report |
|---|---|---|
| Consumer in the home country | Home country's rates | Ordinary VAT return |
| Consumer in the EU, OSS | Destination country's rates | The OSS report |
| Consumer in the EU, home country only | Home country's rates | Ordinary return |
| EU business with valid VAT number, B2B on | 0 % | EC sales list |
| Outside the EU without registration | 0 % export | Shown as export, not declared |
| Outside the EU with registration (VOEC, UK) | The country's rates | Own table for declaration to that country |
| Item above the country's ceiling | 0 % on the whole consignment | Export |