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How does Taxamo determine tax location?
Taxamo’s real time 4-step tax calculation determines the jurisdiction where a specific tax rate should apply to a digital service transaction by:
- Detecting the customer location (determines customer location with available evidence)
- Identifying international tax laws that apply
- Gathering additional location evidence
- Applying the accurate tax rate
Taxamo goes beyond basic requirements as our solution can actually use up to six pieces of evidence in each transaction.
As an optional setting in the merchant portal some transactions if required can be overridden if the customer declares that a country of residence will be proven later on, e.g. after the checkout process.
In this sample test transaction (below) the IP address within NZ conflicted with the billing address of GB. Therefore, the customer would have to tick the ‘Self Declaration’ option to declare. We then have two matching pieces of evidence and can charge the correct VAT rate (GB).