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Tax on paid commissions
There are tax implications to consider when issuing commissions to your affiliates. How much tax to pay and how you pay them will greatly depend on where you live and work. In some regions (especially Germany and the EU), the tax rule must be strictly followed due to national tax regulations, so make sure you've done thorough research about taxes in your country. Merchants like you can be the ones who pay taxes, or affiliates pay themselves.
To select a tax option in UpPromote, go to Settings > Payment > Payment settings > Advance > Tax on paid commissions. If you set up a tax option, the tax information will be reflected on the paid transactions' details and invoices you and your affiliates exported from the app.
If taxes on paid commissions are not required in your region, leave the settings as None. Or else, you can choose if you pay the taxes or if your affiliates do.
If you select the Merchant pays option, the tax value will be accumulated with the total commission amount, which means the total paid amount will include the tax amount.
There are two ways to set the tax value:
- Fixed percentage for all affiliates: a fixed rate applies to all affiliates who bring referral orders.
- Percentage entered by affiliates: each affiliate has the option to enter their tax rate (according to their regions).
If you allow each affiliate to enter a tax rate, there will be an additional field on the Payment settings of the affiliate account. If affiliates do not edit the tax value, the tax will not be shown in the payment details.
Once the settings are saved, the tax information will be displayed on the Payouts tab before you process payments and on the details of the paid transactions.
Tax amount shown on the Payouts tab
If you turn on the Export invoice function, the tax information will be shown on the exported invoices as well.
If you select Affiliates pay, the tax value will be included in the paid commission amount. It will be shown in the paid transaction's details and the exported invoices as Tax (included).