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After spending quite some time analyzing magento's tax system, I finally came to the conclusion that Magento and I do not have a common understanding on how to calculate/display taxes in my particular configuration properly.

I've configured my Magento 1.8.1 CE edition as follows:

  • Catalog prices: including tax
  • Tax calculation Method based on: totals
  • Shipping price: Excluding tax
  • Apply custom tax: After discount
  • Apply discount on prices: Excluding tax
  • Apply tax on: individual product

Delivery for my shop is setup to 10 € excl. VAT

In addition I've setup a discount for all products+delivery of 10%

So that's the setup. Now here's my concrete problem with the tax calculation

I have the following product in my shopping cart:

Product "Banana" 13,90 € incl. 20% VAT (=2,32€)

Now on my checkout-page this adds up to the following picture

  • Banana (excl. VAT) 11,58 €
  • -Discount (10%) 1,16 €
  • +Delivery (excl. VAT) 10,00 €
  • = Grand total excl. Tax 20,42 € (-> so far so good!)
  • Tax 4,12 € (-> wrong? 2,08 € of discounted banana + 2 € of delivery = 4,08 €!)
  • = Grand total incl. Tax 24,74 € (consequently wrong too)

I have absolutely no idea how Magento can come up with those numbers and so far have not found any solution for this (and no bug report) as well. Does anyone has an idea on how I can fix that or whats wrong with my calculation/understanding of Magento?

Thanks for your help!!

Roland

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  • Your Grand Total Ex is wrong first, the discounted banana is 11,58 - 1,16 = 10,42 not 10,62
    – Richard
    May 28, 2014 at 12:55
  • You're right. but that was just a typo. The issue remains. Any idea?
    – Roland
    May 28, 2014 at 17:46
  • Ok, I think I've solved it myself. The trick actual issue was not with the tax calculation (which was totally fine) but rather with the fact that I've set "Apply custom tax: After discount" and "Apply discount on prices: Excluding tax".
    – Roland
    May 30, 2014 at 12:12
  • @Roland feel free to add this as an answer, it is good to know
    – David Manners
    Dec 11, 2014 at 9:53

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Solution, see my comment above:

The trick actual issue was not with the tax calculation (which was totally fine) but rather with the fact that I've set "Apply custom tax: After discount" and "Apply discount on prices: Excluding tax"

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