Tax rules are defined to assign them to a category of products that are treated the same for tax purposes (e.g. electronic service or books).
To add a new tax rule for your product or manage an existing rule, go to "Settings > Payment > Tax Rules". If you offer different products that require different tax rates, you can e.g. configure a tax policy with reduced VAT and a tax policy with regular VAT. By default, there are two preconfigured tax policies for "Chargeback Fee" and for "Services". The tax policy for "Chargeback Fee" defines the tax policy for fees from chargebacks, which are tax-free. If you are invoicing chargeback fees determined by the system, this tax policy is automatically applied. To create a new tax policy, click on "Add Tax Policy" or click on the "Edit" button to modify an existing tax policy.
2. Preconfiguration Tax Policies
You can make the following settings within a control rule:
- Internal Name: Defines the internal name of the tax policy
- Is OSS applicable: If the option is activated, the sales for all products for which this tax rule is stored are also output in the OSS report.
- Split invoice lines when tax rate changes: If the delivery period of an invoice line item covers the validity range of different VAT rates (e.g. in Germany 19% VAT is valid until 01.07.2020, from 01.07.2020 16% VAT and from 01.01.2021 again 19%), the invoice line item will be split automatically according to the defined dates when this option is activated and the tax rate valid on the date will be output on the invoice for each split invoice line item.
- Example: For an invoice with a performance period from 29.06.2020 to 29.06.2021, a tax rate of 19 % is output for the invoice item on the invoice from 29.06.2020 to 01.07.2020, from 01.07.2020 to 01.01.2021 the invoice item is shown at 16 % and from 01.01.2021 to 29.06.2021 the remaining period is again invoiced at 19 %. This results in three separate invoice items with the valid tax rate.
- Note: This procedure can only be used under very special circumstances. Discuss the division of invoice items with your tax advisor before activation.
- Reverse Charge: Defines whether reverse-charge should be applied within this tax rule:
- Disabled: Reverse Charge is not applied to products with this tax policy
- Reverse-Charge: Reverse-Charge is applied to products with this tax policy and a note about reverse-charge is printed on the documents
- This is applicable for the distribution of digital goods and services
- Intra EU supply of goods and services: Receipts are issued for a tax-exempt intra EU supply of goods and services and a reference to this is made on the receipts.
- This is applicable for the distribution of physical goods and service
- Excluded countries: The country list can be used to control which countries reverse charge should be applied to or which countries should be excluded. By default, reverse charge is disabled for the United Kingdom (GB) and Northern Ireland and can be enabled by removing the countries from the blocked countries list.
2.1 Different tax rates for different countries
You can create a separate tax rate for each country in the world within the selected tax rule in billwerk. Here, countries within (European Union) and outside the EU (world) are displayed separately. To create tax rates proceed as follows. First select a country for which you want to create a tax rate via the corresponding drop-down list and then click on the "Add country" button.
Then use the Definition drop-down list to specify which tax definition you are dealing with. Here you can choose between "Vat" and other untaxed definitions. If you have selected "Vat" in the definition, you can now enter the corresponding valid tax rate in the "Rate" field.
In addition to the tax rates defined specifically for individual countries, there is also a fallback tax rate for "Rest of EU" and "Rest of World". This is automatically used as soon as bookings are made in a country for which no explicit tax definition has been configured.
For each country in the world, a general tax rate can first be stored within a tax rule (e.g. Germany 19 % VAT) and then additional tax rates valid for a certain period of time. After the general tax rate for Germany has been stored, Germany can be selected again via the "New country" selection and a date selection can be used to define the point in time from which the new tax rate is to be valid (e.g. 16 % from 01.07.2020). This means that future changes to VAT rates can be preconfigured and do not have to be made manually on a specific date. Besides the country, the effective date and the tax rate, a tax definition can be selected, so that the tax definition can be used to control what kind of tax it is. The description of the tax definition is printed on the invoice.
2.2 Choice of taxation and reverse charge procedures
billwerk automatically determines the applicable tax rate for an invoice. The general procedure for this is described here.
You can read here in which cases billwerk applies the reverse charge procedure.
2.3 Chargeback fees
There is a preconfigured separate tax rule for chargeback fees. A tax rate of 0% is predefined for all customers within and outside the EU. The label on the invoice for chargeback fees is "Fee".
3. Configuration Tax Definitions
Tax definitions describe types of taxes or reasons for tax exemptions applied to your product. The internal name is displayed in the UI and the description is printed on the documents. There are four different types of tax definitions:
- Reverse Charge
The tax type VAT and a number of tax exceptions are already predefined here. If there are further exceptions for untaxed amounts in your business processes, you can create them in the "Untaxed" section by clicking the "Add" button. Here you can define an internal name and a description text for the invoices. Then you can use the tax definition in a tax rule.