In the EU a Gift card (single-purpose voucher) has to be sold with tax applied to it - in other words, gift cards are taxable products also before they are redeemed.
Example: A gift card with the face value of €100 including. tax, will be €80 excluding tax at a rate at 25%. The Gift Card has to be sold at €100 including. tax.
It is required by law in the EU to sell Gift Cards incl. tax and this can't be configured with the current configurations available in the Commerce Gift Card module.
Commerce Gift Card product type does not have an option for setting it to use a Tax Class:https://docs.magento.com/user-guide/customers/account-dashboard-gift-cards.html
https://docs.magento.com/user-guide/configuration/sales/gift-cards.html(Not to be confused with “Tax Class for Gift Options” which is another functionality)
Example resources: https://erply.com/all-that-you-need-to-know-about-taxation-of-gift-cards-in-eu/https://www2.deloitte.com/ie/en/pages/tax/articles/vouchers-new-vat-rules.html
Thank you for highlighting this crucial aspect of EU tax law concerning single-purpose vouchers like gift cards. You've accurately pointed out that the tax needs to be applied at the point of sale of the gift card and not at the time of redemption.
The situation with Magento’s Commerce Gift Card module not providing an option to set a Tax Class for the gift card product type is indeed a significant limitation, especially given the legal requirements in the EU.
Addressing your concern, there are a few potential avenues you might explore:
Custom Development: You could consider hiring a developer to customize the module to accommodate the tax configuration required for gift cards. While this may incur additional costs, it ensures compliance with EU tax laws.
Third-Party Extensions: There might be third-party extensions available in the Magento Marketplace that provide enhanced functionalities for handling taxes on gift cards. It’s worth checking there to see if a solution already exists.
Manual Adjustment: As a temporary workaround, you might manually adjust the gift card prices to account for the tax. However, this approach is not recommended for the long term due to its potential for human error and administrative overhead.
Ensuring compliance with tax laws is paramount, and I would also recommend consulting with a tax professional or legal advisor familiar with EU VAT regulations to make certain that all aspects of gift card taxation are being correctly handled in your store. They can provide guidance tailored to your specific situation and help navigate the complexities of VAT on gift cards.