Whenever I go to the checkout page I see the following specification:

Subtotal            € 39,95 (this is including tax)
Shipping Excl. Tax  €  5,00  
Shipping Incl. Tax  €  5,00  
Tax                 €  6,93  
Endtotal            € 44,95  

It should be:

Subtotal            € 39,95 (including tax)
Shipping Excl. Tax  €  4,13 *
Shipping Incl. Tax  €  5,00 (4,13 + 0,87)
Tax                 €  7,80 (6,93 + 0,87)
Endtotal            € 44,95  

NB: The sums in parentheses are just to explain how these values are calculated. I don't need them displayed. Similarly this applies to "shipping excl. tax". I display it here to make things clear.

So in effect, the tax amount should be calculated for the subtotal including shipping

(39.95+5) - (39.95+5) / 1.21 = 7,80

How can I configure magento to do this?

  1. Make sure that you have the correct Tax Class set up for Shipping in

    System > Configuration > Sales > Tax > Tax Classes > Tax Class for Shipping

    21% VAT (in the Netherlands)

  2. Make sure you have set the right Calculation Settings for Shipping Prices in

    System > Configuration > Sales > Tax > Calculation Settings > Shipping Prices

    If you have entered € 5,00 in the Admin Panel then choose Including Tax
    If you have entered € 4,13 in the Admin Panel then choose Excluding Tax

  3. From your Question I assume that you have already set Price Display Settings for Shipping Prices to Including and Excluding Tax

  4. Set the proper Shopping Cart Display Settings for Display Shipping Amount in

    System > Configuration > Sales > Tax > Shopping Cart Display Settings > Display Shipping Amount

    For example choose Including Tax

  • The problem was that I had selected the wrong Tax group for shipping (your step 1). Now I use the same groups as for the products and it works! Thanks! – SPRBRN Feb 3 '15 at 13:00
  • hi @ForMat, Tax is not applied for shipping price, – jafar pinjar Nov 27 '18 at 10:51

Go to Admin -> System -> Configuration -> Sales -> Tax -> Calculation Settings

There you can specify Shipping Prices: Including Tax

  • This setting does not change anything. Both shipping amounts (including and excluding tax) stay the same. The total tax amount stays at 6.93. To be sure I've flushed the cache, but I guess that is not needed. If you change this, do you see changes during checkout? – SPRBRN Feb 3 '15 at 11:46

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