Expanding your eLearning business globally can be challenging, especially when managing taxes across various countries and regions. LearnWorlds has partnered with Stripe Tax to offer a streamlined solution for automated global tax compliance. This integration allows you to calculate, collect, and report taxes seamlessly, ensuring compliance with local tax regulations without the administrative burden.
Here's how Stripe Tax enhances your operations:
1. Tax Calculation: Display taxes during the payment flow before a transaction occurs.
2. Tax Collection: Collect calculated taxes during a transaction and correctly record taxes.
3. Tax Filing and Remittance: Simplify handing over tax records and payments to authorities in each jurisdiction.
This integration minimizes errors and saves valuable time, making tax management more straightforward and efficient.
In this article, we will understand the functionality of Stripe's tax feature, covering its activation process and setup and offering practical tips and use cases to maximize its benefits.
Billing Details as a prerequisite
Customer billing details are essential for determining taxes that need to be applied in a transaction. To enable real-time tax rate determination, your customers, when in the checkout page, they also have to provide their billing details, meaning their country, address, and postal code.
This is why, when you enable Stripe Tax as a tax management solution in your school, the Billing Details (under the Financial tab) are also automatically enabled. During checkout, customers will be prompted to provide their billing details, allowing Stripe Tax to calculate and apply the correct tax rates accurately.
Additionally, if a valid Tax ID is provided for EU transactions and the company is registered in VIES, the transaction will be treated as a B2B sale, and taxes will not be applied.
Stripe Tax Use Cases
- Automated Tax Calculations: Stripe tax automatically calculates the correct tax rates based on the customer's location.
- Compliance Management: Stay compliant with international tax regulations effortlessly.
- Accurate Reporting: Get detailed tax reports to help with your accounting.
- Sales Process Optimization: Streamline your checkout process by incorporating real-time tax calculations.
- Automatic Tax ID Verification: Automatically verify the Tax IDs of your customers.
- Customer Location Evidence: Collect and store the customer location evidence required from every sale (and store it for up to 10 years).
- Tax Return Optimization: Help ensure you don’t overpay on your tax returns.
Setting up Stripe Tax
To set up Stripe Tax, you must enable Stripe Tax and connect your Stripe account (if not already connected). You can also choose whether the product price should include taxes or if taxes should be calculated and added to the product price at checkout.
Only one Stripe account can be connected to a LearnWorlds school. This means that if you use Stripe Tax and Stripe as a payment gateway, they will be managed by the same Stripe account.
Once a transaction is completed with taxes automatically calculated through Stripe Tax, the invoice generated by the LearnWorlds school will include all the tax-related information determined during the transaction.
For more information on how taxes work, please refer to this resource.
Activate Stripe Tax
To connect Stripe Tax with your LearnWorlds school, you need to:
1. Create your Stripe account.
2. In your Stripe dashboard, enable tax management by selecting the type of products you are to be offering.
3. Click on Tax → Registrations → Add Registration to add all the locations you would like to be included in your Stripe Tax system. 
If a purchase comes from a jurisdiction not set in your Stripe Tax account, then the transaction will not include the relevant taxes.Connect Stripe Tax with your LearnWorlds School
When your Stripe tax account is ready, you need to connect it with your LearnWorlds school.
1. Navigate to your LearnWorlds school under Settings → Financial → Tax Management and choose the Stripe Tax tab.
2. Click on the check mark to Activate the integration.
3. Connect your account. If your Stripe account is not yet connected with your LearnWorlds school, you can do so in this section. If it is already connected, you will see the account information and can manage or disconnect it.
4. In the Tax Calculation setting, choose whether the product price should include taxes (inclusive) or if taxes should be calculated on top of the product price (exclusive). This calculation will be reflected in the total amount shown in the payment section and all sales and revenue reports.
- To connect Stripe Tax, you first need to connect your Stripe account under Financial → Payment Gateway or Settings → Financial → Tax Management → Stripe tax.- Stripe Tax and Quaderno cannot be activated simultaneously; you can only use one of the two integrations for your tax calculation.
- In the case of subscriptions (recurring payments), when you use prices that exclude the taxes, the final prices may be subject to change as the tax rates may change from one payment to the next.
- If you change the Tax calculation setting, this will only affect price calculation for new purchases; installment plan payments that are in progress/that started before the change will remain under the old arrangement.
User Interface
When a user navigates to the checkout page of a product, the billing details will automatically be activated since Stripe Tax requires the user’s location to apply the correct taxes. Once the user enters their billing details, the product price will automatically adjust to reflect the applicable taxes for the transaction.
Even with the integration activated, the product price is affected only when the user reaches the final checkout page. For instance, if you've enabled the Exclusive option (prices do not include taxes), the price displayed in sections or course cards will exclude additional VAT. Ensure your customers are aware of whether prices include taxes by adding a message with a Text widget.Refunds
In some cases, users may request a refund after purchasing a product. Although it isn't possible to process refunds directly through your LearnWorlds school, if you are using Stripe Tax for your school, you can easily handle this through your Stripe account.
To issue a refund, first, process the refund in your Stripe account. Once completed, return to your LearnWorlds school and go to Reports → Sales. Locate the relevant sale, then select the three dots next to the user's name. From there, choose Record Refund Transaction.
Once the popup opens, you'll be able to review the original transaction details, as well as any previous refund transactions. You can note whether you issued a full or partial refund. Depending on the actions you took in the previous step, make sure to record the respective refund transactions accordingly. When you're ready, click Save.
Recording the refund transactions within LearnWorlds as well, will trigger the reverse tax transactions in the Stripe Tax registry side (this option is not yet available through the Stripe Tax dashboard). This ensures that for transactions including taxes, when refunded, the respective tax amount will also be removed from the taxes you will eventually file to the respective tax authorities.
General Notes/Tips
- The percentage of the instructors’ and affiliates’ commission is calculated based on the total price of the product, including or excluding taxes, depending on the setting you select in the Tax Calculation setting.
- Regarding payment plans, the name of the payment plan displays by default the original prices of the initial payment (if you have selected an advanced payment plan with an upfront payment) and the following recurring payments. If the Tax calculation is set to exclusive, this will result in the following break-down of prices:
- Ensure that the respective tax codes for your products are correct. You need to verify this on your Stripe account, this guide can also help you with that.
- Stripe Tax can also be used with other payment gateways activated in your school. For instance, if your school accepts payments via PayPal and a user chooses to pay through PayPal, Stripe Tax will function correctly in that scenario as well.
- If Stripe Tax does not calculate taxes for a given country, the reason can be that you have not set the corresponding jurisdiction in Stripe tax. In this case, no taxes are calculated/applied for the transactions from the corresponding countries, and you will have to monitor and pay the corresponding taxes manually. You can find some FAQs about Stripe Tax here.
- If Stripe Tax is activated for tax calculation, the Business TAX ID field will automatically be enabled (yet not be considered required) to accommodate business transactions.
- Stripe Tax is a paid service offered by Stripe. For more details about their pricing, please check here.
- Don't forget that refunds can only be issued through the dashboard of your payment gateway.