Input VAT Deduction
Aktualisiert am 13. Juli 2026
Input VAT deduction recovers the VAT included in your purchase costs so your profit reflects what products and handling actually cost you, net of tax. This is for VAT-registered businesses that can reclaim that VAT from the tax authority.
What Is Input VAT?#
When you buy products or pay for handling and packaging, the price often includes VAT. If your business is VAT-registered, you can reclaim that VAT, so it is not a real cost to you. Input VAT deduction pulls the reclaimable VAT back out of your reported costs, leaving the true net cost in your profit calculations.
How to Turn It On#
Open your shop settings and find the Input VAT Deduction section, then:
Choose what it applies to. Turn on Deduct input VAT on product costs if the prices you paid for your products already include VAT. Turn on Deduct input VAT on handling costs if your handling and packaging prices already include VAT. You can enable either, both, or neither.
Set the purchase VAT rate. Enter the VAT rate that was included in your purchase prices in the Purchase VAT rate field, for example 19 for 19%.
Only enable this when your costs are entered VAT-inclusive (gross). If you already enter costs without VAT (net), leave it off, otherwise you will reclaim VAT that was never in the cost.
How It Appears in Your Reports#
The recovered VAT is shown as a credit, a positive amount that increases your profit. It does not change the cost figures you entered; it offsets them.
On COGS. Input VAT on product costs appears as a line under Cost of Goods Sold and increases gross profit. For example, at a 19% rate, $100 of VAT-inclusive COGS contains about $16 of reclaimable VAT:
| Line | Amount |
|---|---|
| Cost of Goods Sold | $100 |
| Input VAT on COGS | +$16 |
| True cost of goods | $84 |
The $84 is what is actually deducted from revenue to reach gross profit.
In the breakdown above, Input VAT on COGS shows +$150 indented under the Cost of Goods Sold line. That recovered VAT lifts Gross Profit by the same amount, while the Cost of Goods Sold figure itself stays as you entered it.
On handling. Input VAT on handling works the same way and appears in the Fulfillment & Selling section, offsetting your handling cost.
The amount is calculated as cost × rate ÷ (100 + rate), which extracts the VAT portion already inside a VAT-inclusive price.
If You Cannot Reclaim VAT#
Everything above assumes your business gets the input VAT back from the tax authority. If it does not, turn on Input VAT not reclaimable in the same settings section.
Common cases:
- Your business is not VAT registered.
- A supplier charges a tax you cannot recover, for example the tax on AliExpress orders imported through DSers or the Chrome extension.
With the switch on, the same VAT amount is treated as a cost instead of a credit: it is added to the tax line in your reports and lowers profit. The switch does not change how the amount is calculated, only whether it counts for or against you.
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