Contributed by wilt
UK Tax, First of all although it will help UK customers enter their address you do not need to add counties to the database to get the tax to work.
Heres how to do it, and I am assuming here that you want to have VAT added for goods shipping to any EEC country.
Click on insert.
Name of Zone EEC VAT Zone
Description EEC Countries Zone for VAT
Now click on the details button, or the folder Icon next to EEC VAT Zone
Click on Insert - Select United kingdom for the country - Click on insert
Click on Insert - Select Germany for the country - Click on insert
Click on Insert - Select France for the country - Click on insert
repeat this for all countries in the EEC
Now goto to Admin->Locations/Taxes->Tax Classes make sure that there is an entry called taxable goods. If not create one.
Now goto to Admin->Locations/Taxes->Tax Rates
Click on new tax rate
Tax Class Title should be - Taxable Goods
Zone should be - EEC VAT Zone
Tax Rate - 17.5
Description - VAT 17.5% or similar
priority can be left blank - Click on insert
Note the above assumes you have no zone definitions/tax rates already set up. If you do just delete them.
Now any goods that you wish to charge VAT on must have their tax class set to Taxable goods. You can do this on the product edit screen.
Finally, just to be safe. In Admin->Configuration->My Store make sure that the basis of product tax = shipping