Different countries may impose special taxes on delivery, be it shipping, handling, postage, or other associated fees. Usually, when a taxable product or service is sold, any charges for shipping or delivery that a merchant includes in an invoice may become part of the receipt subject to tax. When one invoice contains taxable and nontaxable products or services as a single charge, the entire invoice is taxable, including shipping or delivery charges. Nontaxable products or services do not imply taxes on shipping. However, this can also vary depending on the country.

In the US, a merchant should charge sales tax on shipping charges when making a sale to a buyer in one of the nexus states if that state’s tax law declares that shipping charges are taxable. However, sometimes it may become challenging because some US states require retailers to charge sales tax on shipping charges, while others do not.

European taxes on shipping are also not that simple. For example, in the UK, a merchant should charge a maximum VAT rate of the order on the shipping costs. In other European countries, the percent of VAT charged on shipping may be the average of all VAT rates charged. VAT rates may also depend on whether the goods are sold within a specific country or outside.

Anyway, if you are required to charge a tax on the delivery of goods from your store to the buyer, X-Cart can be configured to calculate the shipping tax amount in most cases. For more information, please see our tax add-on guides: