Cross border tax

When international sales cross the tax threshold set by other countries you may be required to register, charge and pay tax in that country. This is common when selling into Europe or Australia (GST on imported low value goods). This is a guide to handling these additional tax liabilities in Brightpearl.

We recommend speaking with your accountant to ensure that you are conforming to all relevant tax rules.

Crossing the threshold

As soon as these thresholds are hit, then you are liable for tax in those countries. It is your responsibility to be aware of this and to pay the right tax to the right country following their rules. You will need to monitor the sales value made into each country manually. Brightpearl has no facility for automatically alerting you to any threshold in a particular country being crossed.

Brightpearl sales reports can be used to show total sales value and delivery country in order to calculate the total sales made to a particular country over a specified period of time.

Charging tax

Once you have forecast that sales into a particular country will cross the threshold and you have registered for tax, you will need to configure Brightpearl to apply the relevant tax codes to sales based into that country.

First of all you should create tax codes for the relevant tax rates to be applied. These tax codes will also make it possible to view and report the tax payable to that countries tax authority.

Brightpearl tax zones and countries are used to create tax rules to automatically assign those tax codes to sales being delivered into a particular country.

You will need to ensure that each of your sales channels, such as Amazon, eBay and your website, are configured to charge tax.

Reporting tax

Brightpearl currently only provides VAT and US sales tax reports but it is possible to extract the data you need in order to complete a tax return in another country - this is where using separate tax codes becomes very useful.

Once you have started collecting tax in more countries the VAT return will include all tax codes, so you will need to subtract the cross border tax codes from the VAT return figures.

As long as a tax code per country has been used the total tax liability and net sales can be reported from the general ledger. Filtering by tax liability account code and the tax code, then filtering by sales account types and tax code.

If separate tax codes haven't been used, the sales reports can be configured to include delivery country, net and tax amounts in order to view the total net and tax. Once exported into a spreadsheet the report can be manipulated to provide the totals per country.

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