For this example, it is assumed that multiple VAT-Reduced product tax classes are not needed.

1.

Create a VAT-Standard product tax class.

2.

Create a VAT-Reduced product tax class.

3.

Create a VAT-Free product tax class.

Create the following tax rates:

• Tax Rates

  Tax Rate	Setting
  France-StandardVAT	Country: France State/Region: * ZIP/Postal Code: * Rate: 20%
  France-ReducedVAT	Country: France State/Region: * ZIP/Postal Code: * Rate: 5%
  Germany-StandardVAT	Country: Germany State/Region: * ZIP/Postal Code: * Rate: 19%
  Germany-ReducedVAT	Country: Germany State/Region: * ZIP/Postal Code: * Rate: 7%

Create the following tax rules:

• Tax Rules

  Tax RULE	Setting
  Retail-France-StandardVAT	Customer Class: Retail Customer Tax Class: VAT-Standard Tax Rate: France-StandardVAT Priority: 0 Sort Order: 0
  Retail-France-ReducedVAT	Customer Class: Retail Customer Tax Class: VAT Reduced Tax Rate: France-ReducedVAT Priority: 0 Sort Order: 0
  Retail-Germany-StandardVAT	Customer Class: Retail Customer Tax Class: VAT-Standard Tax Rate: Germany-StandardVAT Priority: 0 Sort Order: 0
  Retail-Germany-ReducedVAT	Customer Class: Retail Customer Tax Class: VAT-Reduced Tax Rate: Germany-ReducedVAT Priority: 0 Sort Order: 0

1.

In the upper-left corner of the Admin, click the Manage Stores link.

2.

Under the default website, create a store view for Germany. Then, do the following:

a.

On the Admin menu, select System > Configuration. In the upper-left corner, set Default Config to the French store.

b.

On the General page, click to expand the Countries Options section, and set the default country to “France.”

c.

Complete the locale options as needed.

3.

In the upper-left corner, set Current Configuration Scope to the German website. Then, do the folloiwng:

a.

On the General page, click to expand Countries Options, and set the default country to “Germany.”

b.

Complete the locale options as needed.

Complete the following General tax settings:

• General Settings

  Field	Recommended Setting
  Tax Classes
  Tax Class for Shipping	Shipping (shipping is taxed)
  Calculation Settings
  Tax Calculation Method Based On	Total
  Tax Calculation Based On	Shipping Address
  Catalog Prices	Including Tax
  Shipping Prices	Including Tax
  Apply Customer Tax	After Discount
  Apply Discount on Prices	Including Tax
  Apply Tax On	Custom Price (if available)
  Default Tax Destination Calculation
  Default Country	France
  Default State
  Default Postal Code	* (asterisk)
  Shopping Cart Display SEttings
  Include Tax in Grand Total	Yes
  Fixed Product taxes
  Enable FPT	Yes
  All FPT Display Settings	Including FPT and FPT description
  Apply Discounts to FPT	No
  Apply Tax to FPT	Yes
  Include FPT in Subtotal	Yes

1.

On the Admin menu, select System > Configuration.

2.

In the upper-right corner, set Current Configuration Scope to the German store.

3.

In the panel on the left, under Sales, select Tax. Then, expand the Default Tax Destination Calculation section.

4.

Clear the Use Website checkbox after each field. Then, update the values to match the site's Shipping Settings point of origin.

• Default Country
• Default State
• Default Post Code

5.

When complete, click the Save Config button to save the settings.