tax-automation

Simplify Global Tax Compliance With Automatic Taxes on the Platform

Charles Higgins

Charles Higgins

— 12 min read
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Table of Contents

Why automatic international taxes matter for growing businesses

Running a business that sells across borders introduces a lot of complexity. Different countries and states have different tax rules, VAT rates, GST, and special local regulations. If we ask our customers to figure out tax during checkout, or if we guess the tax ourselves, we risk undercharging, overcharging, or running into compliance problems. Automatic international taxes give us a practical way to stay accurate and compliant without spending hours on manual calculations or tax spreadsheets.

When set up correctly, automatic taxes calculate the right amount based on where the customer is located, where our business is tax liable, the product type, and any tax IDs we provide. That means fewer abandoned checkouts, fewer accounting headaches, and fewer surprises from tax authorities.

What the automatic tax feature does

The automatic tax feature in our platform automates tax calculations across every checkout type. It works for funnels, payment links, estimates, invoices, and e-commerce stores. It is also compatible with all payment providers supported by the platform, so we do not need to worry about payment integration gaps.

Here are the core benefits we rely on:

  • Automatically applies the correct tax rate based on the customer address
  • Supports VAT, GST, and local tax types for multiple countries and regions
  • Allows entry of business tax IDs for region-specific compliance
  • Provides product-level tax control so we can override global settings per item
  • Includes migration tools for users coming from older, country-specific tax systems

How automatic calculation determines tax

The platform uses four inputs to determine the tax for each transaction. If we make sure these are set up and kept current, the calculations will be reliable:

  • Customer address for billing or shipping. This is the address the customer fills at checkout.
  • Our company's nexus address. This is where we are tax liable and where the platform uses to determine local obligations.
  • Product assigned tax code. Different product categories can be taxed differently; assigning accurate tax categories matters.
  • Any associated business tax ID for the customer or the seller, if applicable. When a business tax ID applies in a region, the calculation follows local rules for business-to-business transactions.

Getting started: enable and configure automatic taxes

We walk through the setup from inside the platform. The process is straightforward and intentionally guided so we can get it right the first time.

  1. Go to Payments in the left menu, then Settings at the top, and click Taxes on the left.
  2. Decide whether to include tax in product prices or to display tax as a separate line item. This is a key business decision and affects how prices show to customers and how much cash we actually receive.
  3. Enable Automatic Tax Calculation by toggling the option at the bottom. Read and accept the terms of use, then save.
  4. Add one or more nexus addresses for regions where our business has tax obligations.
  5. Optionally choose a default tax category for our account. Individual product settings can override this default.

Include tax in price or add tax at checkout

We can choose one of two approaches and both have clear implications:

  • Include tax in all prices: This means the price we show to customers is tax inclusive. For example, if our product is listed at 100 and the tax rate is 10 percent, the tax is already included. We will receive 90 ourselves and 10 goes to the tax authority. This approach can feel simpler for customers because they see one "all-in" price.
  • Exclude tax from prices: This shows the tax as an additional line item during checkout. Using the same example, the product would display as 100 and the tax would add 10, so the checkout total becomes 110. This approach is more transparent with breakouts and can help with B2B or invoice-based workflows.

Once we choose how we want to present prices, we still enable automatic taxes so the platform can figure out the correct rate during checkout or when generating documents like invoices and estimates.

Set the nexus address: where we are tax liable

Configuring a nexus address tells the platform where our business is considered to have tax obligations. Without accurate nexus addresses, the system cannot apply the correct regional rules. For most countries, we provide the country-level nexus. For the United States and Canada we can add state or province-level nexus because those countries require more granular handling.

When adding a nexus address we typically include:

  • Country and, if applicable, state or province
  • Business address details
  • Business tax ID for that region, where applicable

We should keep nexus addresses up to date. If we move locations, open new offices, or establish a physical presence in new regions, we add the corresponding nexus. This helps avoid missed obligations and keeps our tax records clean.

How the checkout displays tax

Once automatic taxes and nexus addresses are configured, the checkout will display tax based on the customer's address. The platform shows this across every checkout type, including payment links and invoices.

For example:

  • If a customer in France buys a subscription when tax is not included in the price, the platform will calculate 20 percent VAT and display it as a separate line. If the product price was 30, VAT would be 6 and the total would show 36.
  • If we create an invoice for a customer in Germany and the product is a one-time item priced at 80, the system will apply the German VAT of 19 percent. The invoice will show 80 plus 19 percent equals 95.20 total.

These line-item tax displays help with transparency for our customers and with bookkeeping when we reconcile sales and tax obligations.

Product-level tax control

Sometimes a single product needs to behave differently than our global tax settings. The platform gives us the flexibility to assign tax rules at the product level. That means we can choose a tax category for an individual product and specify whether tax is included in that product price or not.

How to configure product-level tax settings:

  1. Go to Payments, then Products at the top.
  2. Create a new product or select an existing one and click Edit.
  3. Scroll to the product code section and open the tax category dropdown.
  4. Choose the appropriate tax category for the product, then choose whether tax is included in that product's price or if it should follow the global settings.

Important notes:

  • If we do not set product-level tax settings, the product will fall back to the global tax settings.
  • Setting "tax included in the purchase price for this product only" overrides global settings for that product alone.
  • Setting "no, it will not be included in the purchase price" for a product ensures that tax appears as a separate line only for that product.

Business tax IDs and how the platform uses them

Many countries allow or require businesses to register tax IDs. When a business tax ID is configured, the platform takes that into account and applies the tax rules that match local regulations. This is particularly important for business-to-business transactions or cross-border VAT rules where registered business customers may be exempt or subject to reverse charge mechanisms under local law.

We can add business tax IDs for any nexus region. Keep these up to date. If a commercial customer provides a valid tax ID during checkout, their tax treatment may change depending on the local rules. The platform handles that logic automatically once the IDs are present.

Migrating from an older U.S.-only tax system

If we previously used an older, country-specific automated tax system, the platform includes a guided migration to the new global automatic taxes. The migration process is accessible from the same Taxes settings area and is only visible if the old system is in use.

Migration steps in short:

  1. Go to Payments, Settings, Taxes.
  2. Scroll to the Automatic Taxes section and click Reconfigure. This option appears only if migration is needed.
  3. Read the migration guidelines, confirm, and proceed.

Two practical points during migration:

  • We must set up taxes for every country and state where we sell. The platform needs that information to apply correct local rules.
  • After migration we can still edit business IDs and nexus addresses at any time. It is our responsibility to keep these current for compliance.

Bulk operations and time-saving tips

For businesses selling in many regions, the platform supports bulk adding countries and states for tax calculation. This can save a lot of time compared with entering regions one by one. When planning to sell worldwide, we recommend mapping out the regions where we expect to have nexus obligations and adding them in bulk during initial setup.

Other time-saving best practices:

  • Start with a default tax category that fits most products. Override only the exceptions at the product level.
  • Use a consistent naming system for product tax codes so team members can quickly identify tax treatment.
  • Keep standard operating procedures for when to add a nexus or update a tax ID. Make responsibility clear so updates happen quickly.

Compatibility and limitations

The automatic tax feature is designed to work with every checkout type and with all payment providers the platform supports. That means we do not need to worry about tax calculation stopping at a particular checkout or payment method.

However, it is important to be aware of regional limitations. At the time of writing, automatic tax calculation does not work in India. For sales to customers in India we need to apply manual tax handling according to local rules until that region becomes supported by the platform’s automation.

Real-world examples to illustrate behavior

Example 1: Subscription sold to a customer in France

We sell a monthly subscription listed at 30. Our global setting shows prices exclusive of tax. A customer in France provides a billing address in France. The platform recognizes the customer's country and applies the 20 percent VAT rate. The subscription amount shows as 30, VAT 6, total 36. This transparent breakdown reassures the customer and simplifies our accounting.

Example 2: One-time catering invoice to a customer in Germany

We issue an invoice for a one-time service priced at 80. The customer is in Germany. Automatically, the platform applies German VAT at 19 percent and shows 15.20 as tax. The invoice total is 95.20. If the customer is a registered business and provides a valid tax ID applicable to the transaction, the tax treatment might change depending on local law.

Example 3: Product-level override

We sell downloadable content that is tax-exempt in certain regions. Our global prices exclude tax. For that particular downloadable product we set the product-level tax setting to "tax included" or to a specific tax category that results in zero-rated VAT where applicable. The platform follows the product-level instruction and overrides the global setting for that SKU only.

Practical compliance checklist

To make the most of automatic taxes and reduce risk, follow this checklist regularly:

  • Confirm nexus addresses are up to date for all regions where we have physical presence, employees, or store inventory.
  • Verify business tax IDs entered for each nexus are accurate and valid.
  • Assign accurate product tax categories for all SKUs, especially for services, digital goods, and tax-exempt items.
  • Decide and document whether our pricing is tax-inclusive or tax-exclusive and make sure product settings reflect that decision.
  • Use the platform’s bulk add feature when expanding into multiple regions to save time and ensure consistency.
  • Run test checkouts from different countries to confirm tax behavior before launching sales campaigns.

Troubleshooting common issues

If taxes look wrong, these are the most common causes and how we fix them:

  • No nexus or incorrect nexus entered. Fix by adding or correcting nexus addresses for the relevant state or country.
  • Product tax category not assigned or assigned incorrectly. Fix by editing the product and setting the proper tax category or product-level inclusion setting.
  • Business tax ID missing or invalid. Add the correct tax ID for the region and reattempt the transaction.
  • Checkout address mismatch. Ensure customers enter complete billing or shipping addresses; platform calculates tax based on those addresses.
  • Regional limitations. If a region is not supported for automatic calculation, handle taxes manually for that region and monitor platform updates for support changes.

How this saves time and reduces headaches

Automatic taxes let us focus on the parts of the business that matter most: product development, marketing, and serving customers. Instead of maintaining spreadsheets of rates, crosschecking three different tax rules, or manually adjusting invoices after each sale, the platform does the heavy lifting. That reduces errors, speeds up reconciliations, and minimizes the chance of compliance problems.

From a customer experience perspective, clearly shown tax amounts reduce surprises at checkout and lower cart abandonment. From an operations perspective, centralized tax settings mean our finance team spends less time fixing mistakes and more time on strategic activities.

Best practices for teams and agencies

If we manage multiple client accounts or run a team, these practices make tax management predictable and repeatable:

  • Create a tax setup template that includes the standard nexus addresses, default tax categories, and naming conventions. Apply that template when initiating new accounts.
  • Document when to add nexus addresses. For instance, add a nexus whenever we open an office, hire an employee in a new state, or store inventory in a new fulfillment center.
  • Train onboarding teams on how to edit product-level tax settings, and who is responsible for verifying business tax IDs.
  • Schedule quarterly reviews of tax settings to catch changes like new nexus obligations or revised tax laws.

Testimonials from real users

"Switching to automatic taxes removed guesswork from our global checkouts. We spend less time closing support tickets and more time growing revenue."

"Having product-level control means our team can handle exceptions without changing account-wide settings. That was a game changer for our catalog."

"The bulk add for countries saved us hours during launch week. Instead of entering 20 regions manually, we configured them in one step."

What to watch for as you scale

As sales grow across more regions, tax complexity can scale with it. Here are a few things to monitor:

  • New nexus events like employees in new states, physical stores, or fulfillment partners storing inventory can create tax obligations.
  • Changes to local VAT or GST rules. Even small rate adjustments can add up across thousands of transactions.
  • Customer billing behavior. If we discover many customers from a region are business customers with valid tax IDs, we might need to adjust invoice templates or require tax ID collection at checkout.
  • Regulatory updates in regions that are newly supported or changed by the platform. Keep an eye out for platform announcements and update procedures accordingly.

Troubleshooting checklist before contacting support

If we need support, run through these checks first to speed resolution:

  • Verify the customer's billing or shipping address is complete and correct.
  • Confirm the nexus address for our business is present and accurate for the region in question.
  • Check the product's assigned tax category and product-level inclusion setting.
  • Make sure any relevant business tax IDs are entered and valid.
  • Try a test checkout from the target region to reproduce the issue and capture screenshots or error messages for support.

Wrapping up: clear pricing, less tax stress

Automatic international taxes bring clarity and consistency to cross-border sales. By combining accurate customer address handling, up-to-date nexus addresses, product-level tax codes, and business tax IDs, we can trust that taxes calculated at checkout, on invoices, and on estimates are correct and compliant.

We recommend treating tax setup as part of launch planning. Decide whether prices are tax-inclusive or exclusive up front, add nexus addresses for every region where you have obligations, assign product tax codes, and run test transactions. These steps reduce surprises and help the business scale confidently.

FAQ

How do we enable automatic taxes in the platform?

Go to Payments in the left menu, then Settings and Taxes. Choose whether to include tax in prices or display it separately, accept the terms, enable automatic taxes, add nexus addresses, and save. Optionally set a default tax category and configure product-level overrides later.

Will the automatic tax calculation work with all checkout types and payment providers?

Yes. The automatic tax system works across funnels, payment links, invoices, estimates, and e-commerce stores and is compatible with all payment providers supported by the platform.

Should we include tax in our listed prices or show tax separately at checkout?

Both options are valid. Include tax in prices for a simpler customer experience with all-in pricing. Show tax separately for transparency and clearer accounting. Choose the approach that best fits our business model and customer expectations. Product-level overrides are available for exceptions.

What is a nexus address and why is it important?

A nexus address represents a place where our business has tax obligations, such as an office, employee, or inventory location. The platform uses nexus addresses to determine the correct local tax rules to apply for sales. Keeping nexus addresses accurate is critical for compliance.

How does the platform calculate tax for each transaction?

Tax is calculated using four inputs: the customer billing or shipping address, our company nexus address, the tax code assigned to the product, and any applicable business tax ID. The platform applies local rules based on those inputs to produce the correct tax amount.

Can we override global tax settings for a single product?

Yes. When editing a product, we can select a tax category and choose whether tax is included in that product price or whether it follows global settings. Product-level settings override the global configuration for that item only.

How do we migrate from an older U.S.-only tax system?

Open Payments, go to Settings and Taxes, then look for the Reconfigure button in the Automatic Taxes section. Follow the guided migration steps, confirm the guidelines, and set up taxes for each country and state where you sell.

Is automatic tax calculation available in every country?

Automatic calculation supports many countries and regions, including state-level handling for the United States and Canada. However, some regions may not be supported at the moment, for example India requires manual handling until support is added. Check the platform’s settings for the most current availability.

Can we bulk add countries and states for tax calculation?

Yes. The platform supports bulk adding countries and states to speed up setup when we plan to sell in many regions. Use the bulk add feature to save time and ensure consistency across regions.

What should we check before reaching out to support about a tax problem?

Confirm the customer address is complete and correct, verify our nexus is set for the affected region, check the product tax category and product-level settings, and ensure any applicable business tax IDs are entered. Reproduce the issue in a test checkout and gather screenshots to share with support for faster resolution.

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