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How do I ensure affiliates are not earning commission on VAT?
How do I ensure affiliates are not earning commission on VAT?

Setting up your commission calculations to account for VAT.

Shakima avatar
Written by Shakima
Updated over a week ago

When you’re setting the calculation logic that will determine your commission rates, you’ll notice a question about whether or not tax (e.g. VAT) is included in your product pricing. If tax is included in the price of the items in your store, it’s likely that your store is configured to use VAT.

How do I know if my store uses VAT or separately calculated taxes?

When your customer checks out, if your store is set up to use VAT, the total price at the end of the order is not increased by the tax price.

Example A: Store using VAT

Item A $30

Item B $20

VAT $10 (included in the price of the products)

Shipping $5

Order total: $55

If taxes are calculated separately, the order total would be higher like in the example below.

Example B: Store NOT using VAT

Item A $30

Item B $20

Tax $10

Shipping $5

Order total: $65

Stores that use VAT like in Example A will need to ensure that the commission calculation settings in Refersion are configured to match this specific tax structure.

How to set up your commission settings so commission is reduced when an order includes VAT:

In Refersion, navigate to Account > Settings > Calculation Logic. Here, you’ll select the Taxes ARE included in my product pricing, subtract it from the total item price (typically for EU shops) option for the “Does your product pricing include tax (e.g. VAT)” question. This way Refersion knows the tax is already accounted for in the item's price when calculating commission.

Next, you’ll want to ensure the tax box is checked for the “Do NOT apply commission to these items” option. Altogether your settings should look similar to the image below:

Once configured, anytime an order comes through as a conversion in Refersion that includes VAT, commission will be reduced for the VAT at the commission rate set in your offer settings.

Note: Commission subtraction for VAT will only occur when the offer is configured to give a percentage-based commission.

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