Order was free but invoices still show taxes, tax settings?

Question

I am wondering what the correct tax settings should be in my situation, since I am currently getting some very odd results.

How it should be is that all prices on the site are tax included, and discounts should apply on the prices INCLUDING tax. So if I buy a product of €100 (tax included) en get €50 off the total price should be €50 (tax included).

At the moment I have the current tax configuration, which seem right.

And sure on the site all product prices are correct, they are displayed including tax. I tried a discount code which gives me the product for free and should give me free shipping.

As you can see my total is zero. Shipping is free, and the total in checkout is also zero. So all correct there.

However if I now go to the admin backendm checkout the order, which is still zero

and want to create an invoice for this order, I get this.

All of sudden tax and often also shipping is added to the invoice anyway. Which is the tax on the product.

This makes no sense to me. Are my tax settings wrong or is there something wrong with my Magento installation somewhere?

Edit: The checkout order seems correct too

Answer 1

Magento is obviously calculating the tax before it calculates the discount. There's a couple reasons I can think of why it would be doing this. Lets take a look at the easiest one to fix first. Go to System -> Configuration -> Sales -> Checkout Totals Sort Order. Make sure the number next to "discount" is less than the number next to "tax."

If you checked that and it looks like the discount is supposed to be calculated before tax and you are still having this problem, then you probably have a poorly written extension somewhere that is overriding the order set here through its config.xml. Try disabling extensions one by one and testing it again to find which extension it is.