Sales Tax/VAT handling in ChartMogul

Sales tax/VAT impact ChartMogul metrics in several ways, depending on the metric and the way sales your billing system handles tax/VAT.

Default tax handling behavior

ChartMogul handles tax based on these default behaviors:

Taxes are reported in the Taxes row in the Chart Data table beneath the Net Cash Flow and Gross Cash Flow charts.

How is tax handled for different billing systems?

Taxes may not be broken out into separate line items if you use tax management software such as Avalara, BBillbo, Octobat, Quaderno, Taxamo, or TaxCloud.

Usually, the default behavior above will be followed. However, there are specific behaviors and limitations for each billing system that ChartMogul supports. Below we have detailed the behaviors unique to each billing system.

Skip to a billing system section:

  1. App Store Connect
  2. Braintree
  3. Chargebee
  4. Chargify
  5. GoCardless
  6. Google Play
  7. Google Sheets
  8. Import API
  9. PayPal
  10. Recurly
  11. Shopify
  12. Stripe
  13. Third-Party Integrations

App Store Connect

ChartMogul does not receive explicit Tax/VAT information from the App Store Connect API, meaning that ChartMogul can't distinguish what is a tax or an Apple fee which can be a different significant percentage, depending on some factors.

Braintree

Taxes billed through Braintree will not follow the default tax handling behavior. Braintree taxes are not broken out into a separate line item in a transaction and will contribute to your subscription revenue. This is because ChartMogul is not able to determine the amount of tax paid as part of a transaction because the tax amount value on a customer's transaction is a Level II data field that does not affect the total transaction amount. In other words, the tax amount value in Braintree is a purely cosmetic field.

Read more about the tax amount parameter in Braintree.

Chargebee

Taxes paid by customers imported using the Chargebee integration will follow the default tax handling behavior in ChartMogul, provided that you specify a tax amount when adding invoices to your customers. If no tax amount value is provided as part of an invoice, the tax will not be excluded from your MRR.

Please note that we don't support Chargebee's tax-inclusive setting. Transactions with inclusive tax may be interpreted higher than expected.

Chargify

Taxes paid by customers imported using the Chargify integration by SaaSync will follow the default tax handling behavior in ChartMogul, provided that you specify a tax amount when adding invoices to your customers. If no tax amount value is provided as part of an invoice, the tax will not be excluded from your MRR.

Read more about taxes in Chargify.

GoCardless

Since GoCardless does not include information on the tax amount for payments, ChartMogul is unable to deduct any tax component before calculating MRR. The MRR reported by ChartMogul will, therefore, include tax.

Google Play

Information on this can be seen under Fees in this article.

Google Sheets

Taxes paid by customers imported using ChartMogul's Google Sheets integration will follow the default tax handling behavior in ChartMogul, provided that you specify a tax amount when adding invoices to your customers. If no tax amount value is provided as part of an invoice, the tax will not be excluded from your MRR.

Read more about importing billing system data using Google Sheets.

Import API

Taxes paid by customers imported via the Import API will follow the default tax handling behavior in ChartMogul, provided that you specify a tax_amount_in_cents in Import API invoice line_items.

Read more about importing invoices using our API.

PayPal

This only applies to the PayPal REST API, as this is the only PayPal use case currently supported by ChartMogul. Other PayPal billing methods, such as the PayPal Subscription button, are not supported.

Taxes billed through PayPal do not follow ChartMogul's default tax handling behavior. Tax will not be broken out into a separate line item in ChartMogul and will be included in your recurring revenue metrics, including MRR, ARR, MRR movements, Average revenue per account, and Average sale price. Tax will not be excluded from your Cash flow metrics, such as Net cash flow and Non-recurring revenue.

This behavior is due to limitations with PayPal's REST API. ChartMogul uses PayPal transactions to generate invoices and MRR movements. However, any tax paid by the customer isn't specified on a customer's transactions but is specified as part of the PayPal plan. Additionally, there isn't a direct relationship between transactions and plans in PayPal that would enable ChartMogul to report the amount of tax paid by a customer accurately. Tax is specified as part of the PayPal subscription, but because PayPal permits users to define several payment definitions for a plan, this makes it impossible to know exactly how much tax a customer paid in a transaction. It is possible to extrapolate the amount of tax paid by a customer from a PayPal transaction. Still, ChartMogul can't guarantee that the reported tax amount is accurate. For this reason, tax is included in MRR and is not broken out into a separate line item when reported in ChartMogul.

Recurly

VAT and other taxes billed through Recurly will follow the default tax handling behavior, provided that you use Recurly's Taxes features. If taxes are not applied to the plan or add-on, the default tax handling behavior will not be observed, and your MRR may be increased by the inclusion of taxes.

Further information: Taxes (Recurly documentation).

Shopify

VAT and other taxes billed through Shopify will follow the default tax handling behavior, provided that you use Shopify's Taxes feature.

Stripe

VAT or sales tax billed through Stripe will be recognized correctly if a customer's Stripe issued invoice has a tax_amounts or a tax_rates value. ChartMogul will list tax (inclusive and exclusive) as a column within a line item with the name Tax in a customer's transaction. Read more about collecting taxes for recurring payments with Stripe.

A transaction with an exclusive tax applied:

A transaction with an inclusive tax applied:

Read more about applying taxes to subscriptions.

Third-Party Integration

There are several billing systems that were created by third parties, including:

  • BillForward
  • ChargeOver
  • PayKickstart
  • WHMCS

Tax handling by billing system integrations created by third parties will depend on their implementation. All third-party integrations are built using the Import API, meaning that if tax is able to be imported per line item by specifying the tax_amount_in_cents, then the integration should follow the default tax handling behavior in ChartMogul.

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