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How tax calculations work

Worldwide tax calculations are based on your registered tax jurisdictions, the product details, and the location of your customer.

The following are the basic rules for tax calculation depending on the type of product sold:

  • For sales of physical goods Quaderno calculates tax based on where a product is shipped from and where it is shipped to.
  • For sales of services, it depends on the type of service:
    • For e-Service, e-Book, and SaaS sales, Quaderno will apply tax rates based on your customer's location and your registered jurisdictions.
    • For Consulting services, Quaderno will apply the local tax rate where your business is based and no tax in any other tax jurisdiction.
    • For the rest of the services, Quaderno will apply your local tax rate on all sales worldwide.

Configuring your Quaderno account​

Tax calculation API calls infer any parameter not explicitly set in the call from your account configuration. It's key to set your account defaults correctly.

1. Registered tax jurisdictions​

For Quaderno to calculate tax correctly, you first need to set up the tax jurisdictions where your business is currently registered and has a local tax number.

warning

This registration is independent of the countries or regions where you sell your products or services.

For instance, when a US company is selling products to Australian customers, they might NOT need to register there if it hasn’t surpassed the Australian annual threshold. Check our article about tax registration thresholds for more information.

You can do it easily from your Quaderno dashboard. Please read this Support Center article in case you have any questions.

2. Default product type​

Products can be either services or goods.

Select your default product type on the Preferences page, based on the products you sell most. The default product type will be used when we do not receive that information on a transaction basis.

3. Default tax code​

Different tax codes identify different types of product, which in turn it's key to determine its tax rate.

Select your default tax code on the Preferences page, based on the products you sell most. The default tax code will be used when we do not receive that information on a transaction basis.

Once you have set up your account correctly, you are ready to use the tax calculation APIs.

We always recommend developing any new integration and testing it with Quaderno Sandbox first.

Quaderno lets you choose the best way to calculate taxes within your app: