Most common discount types can be deducted through Kustom Checkout(KCO). Find all information below on vouchers, codes, gift cards and loyalty clubs, including integration and VAT handling.

A discount code or voucher gives the buyer a right to get a price reduction, either in absolute value, or as a percentage off. The final price of the product is the tax basis for the VAT and the tax rate stays the same. If the product is e.g. reduced by 10%, the absolute value of the VAT is also reduced by 10%.

KCO supports value-based and percentage discounts, and they can be applied per specific items, or across entire orders. Currently, KCO does not support the user interface to digest discounts, but they can be applied to the order lines. For percentage reductions, the discounts and taxes can either be added as positive values per order line as total_discount_amount, or added as separate order lines with negative amounts.

The formula to calculate the tax amount is total_amount - total_amount * 10000 / (10000 + tax_rate).

The order is placed for a white t-shirt discounted by 20% at a tax rate of 25%.

{
  ...
  "name": "white t-shirt",
  "quantity": 1,
  "reference": "12-345-ABC",
  "tax_rate": 2500,
  "total_amount": 25000,
  "total_discount_amount": 5000,
  "total_tax_amount": 5000,
  "type": "physical",

{
  ...
  "name": "10 USD discount",
  "quantity": 1,
  "reference": "12-345-ABC-discount",
  "tax_rate": 2500,
  "total_amount": -1000,
  "total_tax_amount": -200,
  "type": "physical",
  "unit_price": -1000

{
  ...
  "name": "buy 2 for 3 discount",
  "quantity": 1,
  "reference": "buy 2 get 3-discount",
  "tax_rate": 2500,
  "total_amount": - {3*item price - 2*item},
  "total_tax_amount": - {total_amount*0.2),
  "type": "discount",
  "unit_price": -{3*item price - 2*item}

Gift cards can be used to purchase any item from the merchant that issued them. Unlike vouchers and codes above, gift cards have a face-value assigned to them, meaning that someone paid for the purchase of that value. Hence, the purchase of a gift card can be seen as a currency exchange, so no VAT is triggered at this point. The VAT needs to be calculated only upon redemption of the gift card. Gift cards are most commonly categorized as so-called multi-purpose vouchers, meaning that they allow purchases for products with different tax rates. Since the tax amount cannot be predicted until purchase, the redemption of a gift card inside KCO should be through a separate order line with a negative amount and the VAT set to 0.

There are many different types of loyalty clubs and schemes, so evaluation needs to be done on a case-to-case basis. Most often, buyers collect points for their purchases that they can then exchange for bonus checks. The bonus checks should be handled similarly to a code or voucher, meaning the price and VAT should be reduced subsequently to the applied bonus points. Please reach out to Merchant support for help.

Store credit is used when a customer returns an item that was already paid for and does not get a cash refund for it. This only applies to store credit that is created outside of Klarna’s payment methods. In this case the store credit should be treated as a gift card, meaning as a new negative order line with the VAT set to 0. Issuing the store credit is not subject to taxation, only the subsequent purchase with it will trigger VAT.