LILA and Tax Determination Settings
Line Item Liability Assignment (LILA) is the name of the process where liability is assigned for a tax.
In most cases, it is done after the tax rate is determined. After the service calculates the rate, it will assign the liability for the payment to the buyer, seller or marketplace.
However, in some e-commerce use cases, a LILA determination is needed before the service can calculate the tax rate.
You can use a combination of marketplace and seller settings to tune this process to meet your needs.
For example, you might want the liability to be assigned to the marketplace if a seller is not registered in a country to pay tax.
Locations and Registrations
You use the is_seller_located_within_region field in your marketplace's settings to indicate if they are located in the specified region. marketplace.
For example, the "is_seller_located_within_region": false setting indicates that the Marketplace is not located in the EU.
However, the marketplace is registered in Poland as a seller. This means that they can bear liability for certain transactions sent to Poland:
"settings": [
{
"effective_from": "2021-12-17",
"value": {
"regions": {
"EU": {
"taxation": {
"physical": {
"is_seller_located_within_region": false
}
}
}
},
"countries": {
"PO": {
"taxation": {
"physical": {
"is_seller_registered": true,
"is_physical_tax_enabled": true,
"seller_tax_number": "ABC1234"
}
}
}
}
}
}
],
You can also use the same setting in the region in the seller's settings.Here you specify both the country and region settings to match the marketplace's settings. Note the following:
- The seller is set as located in the EU in the region settings (
"is_seller_located_within_region": true). - This seller is registered to pay tax in Poland (
is_seller_registered). - They are also enabled to pay physical tax in Poland (
is_physical_tax_enabled": true).
{
"settings": [
{
"countries": {
"PO": {
"is_domestic": true,
"taxation": {
"physical": {
"is_seller_registered": true,
"is_physical_tax_enabled": true,
"seller_tax_number": "DE456778",
"tax_obligation_country_code_override": "IT"
}
},
"regions": {
"EU": {
"taxation": {
"physical": {
"is_seller_located_within_region": true,
"use_marketplace_as_intermediary": false,
"ioss_member_state_of_identification": "GB",
"ioss_registration_number": "GB454949",
"oss_member_state_of_identification": "FR",
"oss_registration_number": "FR458686"
},
}
}
},
"timezone": "GMT"
},
"effective_from": "1999-01-01"
}
],
"country": "IE",
"postal_code": "XC12134",
"business_name": "Test Widgets",
"email": "[email protected]",
"postal_address_line3": "Building 5",
"postal_address_line2": "Main Street",
"last_name": "Murphy",
"first_name": "Audey",
"seller_code": "XCV123",
"postal_address_line1": "Wessex Town",
"middle_name": "Humphrey"
}
'
Depending on the circumstance, this can change tax and liability determination. For example, if (like in the example) the marketplace is not registered to pay tax in a country but the seller is, then the seller may be liable for goods in certain circumstances.
Liability Rule Overrides for Sellers
You can use the physical.tax_obligation_country_code_override setting to change how liability is assigned in a specific country for a specific Seller. You can set it to one of the following
seller_country: Liability is assigned to the seller's country.ship_from: Liability is assigned to the country that the goods are shipped fromcountry_code: Liability is assigned to the specified country code. For example, IE for Ireland.
For example, the following seller setting uses Germany for all physical sales in Germany:
{
"settings": [
{
"countries": {
"DE": {
"is_domestic": false,
"taxation": {
"services": {
"use_marketplace_as_intermediary": true
},
"physical": {
"is_seller_registered": true,
"is_physical_tax_enabled": true,
"seller_tax_number": "DE456778",
"tax_obligation_country_code_override": "DE"
}
},
"regions": {
"EU": {
"taxation": {
"physical": {
"is_seller_located_within_region": true,
"use_marketplace_as_intermediary": false,
"ioss_member_state_of_identification": "GB",
"ioss_registration_number": "GB454949",
"oss_member_state_of_identification": "FR",
"oss_registration_number": "FR458686"
},
"services": {
"use_marketplace_as_intermediary": false
}
}
}
},
"timezone": "GMT"
},
"effective_from": "1999-01-01"
}
],
"country": "IE",
"postal_code": "XC12134",
"business_name": "Test Widgets",
"email": "[email protected]",
"postal_address_line3": "Building 5",
"postal_address_line2": "Main Street",
"last_name": "Murphy",
"first_name": "Audey",
"seller_code": "XCV123",
"postal_address_line1": "Wessex Town",
"middle_name": "Humphrey"
}
'
Marketplace Intermediary Settings
To indicate if you want your marketplace to be able to act as an intermediary for applicable transactions, you use the use_marketplace_as_intermediary field. You can set this for physical goods and services at the region or country level. When enabled, the marketplace may be assigned liability where applicable.
For example, the following seller settings allow the marketplace to be used as an intermediary for physical goods but not for services:
{
"settings": [
{
"countries": {
"DE": {
"is_domestic": false,
"taxation": {
"services": {
"use_marketplace_as_intermediary": false
},
"physical": {
"is_seller_registered": true,
"is_physical_tax_enabled": true,
"seller_tax_number": "DE456778",
"tax_obligation_country_code_override": "DE"
}
},
"country_subdivisions": {
"BWB": {
"taxation": {
"is_enabled": true,
"physical": {
"use_marketplace_as_intermediary": true
}
}
}
}
}
},
"regions": {
"EU": {
"taxation": {
"physical": {
"is_seller_located_within_region": true,
"use_marketplace_as_intermediary": false,
"ioss_member_state_of_identification": "GB",
"ioss_registration_number": "GB454949",
"oss_member_state_of_identification": "FR",
"oss_registration_number": "FR458686"
},
"services": {
"use_marketplace_as_intermediary": false
}
}
}
},
"timezone": "GMT"
},
"effective_from": "1999-01-01"
}
],
"country": "IE",
"postal_code": "XC12134",
"business_name": "Test Widgets",
"email": "[email protected]",
"postal_address_line3": "Building 5",
"postal_address_line2": "Main Street",
"last_name": "Murphy",
"first_name": "Audey",
"seller_code": "XCV123",
"postal_address_line1": "Wessex Town",
"middle_name": "Humphrey"
}
'
Regional Tax Settings
For more information, see Regional Tax Settings.
Updated about 2 months ago