1) Total amount (on the payment processor end) does not change, but taxes and thus the net amount do, resulting in higher or lower margin for the merchant (currently the only way to do this, manually)
2) Total amount is adjusted before renewal to reflect latest tax settings. I imagine this is much more complex as it would require triggering a change right _before_ the actual renewal and I don’t know if this is supported by all payment processors…

Having 1) automated would already help tremendously though!

Yes that should work perfectly fine!

Will this work with the EU VAT plugin you recommend on your Tax Settings page? I’m talking about this one here: http://www.wproute.com/2013/10/vat-for-edd/

I don’t think there should be any problem, but taxes are such a complicated part, I just want to be sure everything will be OK.

There is an upgrade routine that gets run after the update is installed that will go through every subscription record and populate those fields. Once the upgrade routine is finished (can take a while), all subscription records will show the initial and recurring tax amounts.

We haven’t yet added a way to disable taxes on existing subscriptions (for future renewal payments) but that may be something we can add in the future.

But I have one big question, how do you handle older recurring payments, where the four fields (initial_tax_rate, initial_tax, recurring_tax_rate and recurring_tax) weren’t set and data is already sent to the payment gateways?

Did you also think about the possibility that states change their VAT rates or in the case of the UK that after the brexit there is not need for charge with VAT anymore?