How VAT in each customer's country eats EU margins

When you sell across borders, the price your customer pays includes VAT, and the VAT rate follows the destination country. If your dashboard counts the whole price as revenue, a part of that revenue was never yours.

What Klirry does

Klirry takes VAT out of the VAT-inclusive price at the destination country's rate, from a versioned rate table, so an old order keeps the rate it had on its date. No flat estimate is used. This article describes that calculation. It does not give tax advice: how to register, file and pay VAT is a question for your accountant.

An example

This is an illustrative example, not a real customer's numbers. The same order, priced at EUR 119.00 including VAT, with the same payment fee, shipping and product cost, sent to three countries. The rates are the ones in Klirry's VAT table on the day this article was written.

The assumed payment fee is EUR 3.45, shipping EUR 5.00 and product cost EUR 30.00 in all three. The price did not change; the margin did, by EUR 6.30 between the first and the last row. A shop that prices every country the same and looks at one blended margin cannot see this.

Why it matters for ads

A lower contribution means a higher break-even ROAS, the return on ad spend at which an ad stops losing money. The calculator shows it for your own order: pick the destination country and the VAT is looked up for you. The true profit article walks through the other steps, and pricing shows what it costs to have this on every order.

See the methodology for the formula and the order of the steps.