Hi Fawaad Suleman,
1) Issue
- A card payment method is configured with a 10% card fee, and the fee is correctly applied during POS payment
- However, during transaction execution (as shown in the POS payment screen), the card fee is embedded in the total amount (Rs14,890.95) and not shown as a separate taxable line
- The system does not calculate or apply VAT/tax on the card fee portion
- Requirement is to ensure VAT is applied on the card fee within the standard Commerce framework
2) Reason
- Based on the POS behavior in the screenshot:
- The card fee is applied at tender level during payment, not as a transaction line
- The total amount shown already includes the fee, but:
- The fee is not visible as a separate component
- It is not passed through the sales tax calculation engine
- In D365 Commerce architecture:
- Tax calculation occurs before payment stage, at cart/sales line level
- Payment method fees (like card fee %) are applied after tax calculation, during tender processing
Therefore:
- VAT logic is never triggered for the card fee amount
- Even though setup includes:
- Electronic payment type with 10% fee
- Ledger accounts for posting
- The system treats this purely as a financial adjustment, not a taxable charge
- The POS screen confirms this behavior:
- No additional line for fee
- No tax breakdown for fee
- Only total amount updated
3) Resolution
Standard limitation:
- VAT cannot be applied to card fees configured via payment method / electronic payment type
Recommended solution (validated against POS behavior):
- Replace tender-based fee with Auto charge (markup charge):
- Create a charge code for "Card Fee"
- Configure as % (10%)
- Assign proper sales tax group + item tax group
- Apply automatically (via header/line charges or logic tied to payment type)
- This ensures:
- Fee appears as separate line in transaction
- Tax engine calculates VAT on fee
- POS and receipts show correct breakdown
Alternative controlled approach:
- Add the card fee as a manual/automatic charge before payment step
- Ensure it exists in cart before tax calculation
Customization option (if fee must stay tied to payment method):
- Extend POS/CRT logic to:
- Convert payment fee into a charge line dynamically before finalizing transaction
- Trigger tax calculation
Important validation (based on screenshot):
- Current implementation confirms fee is applied at payment stage only
- Therefore, without converting it into a sales/charge line, VAT cannot be calculated
Conclusion:
- The current setup is working as designed
- To apply VAT, the card fee must be moved from payment layer → sales/charge layer
- This requires configuration change (auto charges) or customization
For a more detailed answer, please provide more information.
Rg,
Alexander
*Due to the complex and different possibilities of deploying Dynamics 365 I highly recommend not to setup the application without some expert/partner or support. (For more information contact me under anassl@inno-solutions.info or visit www.inno-solutions.de)
*The Information comes directly from the manufacturer or provider and are validated (not guaranteed) up to date of creation of the posting.
References:
- Microsoft Licensing Guide
- Microsoft Doc`s/Learn
Share
Report
7
All responses (
Answers (
