Magento Commerce, 1.14.x

Managing Taxes

Magento provides a variety of options to define taxes. Tax classes are used to define “tax rules.” Tax rules are defined as a combination of a Product Class, a Customer Class and a Tax Zone and Rate, as described in this chapter.

Each type of customer can be assigned a customer class when you define them, and each product is assigned a tax class. Magento analyzes the shopping cart of each customer and calculates the appropriate tax according to the class of the customer, the class of the products in the shopping cart, and the region (as defined by the customer’s shipping address, billing address or shipping origin).

Magento also supports the calculation of Value-Added Tax (VAT) for business-to-business transactions in the European Union.