VAT setup instructions

Here’s how to do it, and I am assuming here that you want to have VAT added for goods shipping to any EEC country.

Admin > Locations/Taxes > Zone Definitions

Click on insert.

Name of Zone: EEC VAT Zone
Description: EEC Countries Zone for VAT

Now click on the details button, or the folder Icon next to EEC VAT Zone

Click on Insert - Select United kingdom for the country - Click on insert
Click on Insert - Select Germany for the country - Click on insert
Click on Insert - Select France for the country - Click on insert

repeat this for all countries in the EEC

Now goto to Admin > Locations/Taxes > Tax Classes make sure that there is an entry called Taxable Goods. If not, create one.

Now goto to Admin > Locations/Taxes > Tax Rates

Click on new tax rate

Tax Class Title should be - Taxable Goods
Zone should be - EEC VAT Zone
Tax Rate - 17.5
Description - VAT 17.5% or similar
priority can be left blank - Click on insert

Note the above assumes you have no zone definitions/tax rates already set up. If you do just delete them.

Now any goods that you wish to charge VAT on must have their Tax Class set to Taxable Goods. You can do this on the product edit screen.

Finally, in Admin > Configuration > My Store make sure that Basis of Product Tax is set to Shipping.