Tax & VAT

Tax & VAT#

Admin → Settings → Tax Rules

Commerce applies tax as line items on invoices using a rule-based system. You define rates per country; the TaxService evaluates each invoice at creation time and inserts the correct tax line.

Adding a Tax Rule#

1. Go to Admin → Settings → Tax Rules.
2. Click Add Rule.
3. Fill in:

4. Save. The rule applies to all new invoices from this point forward.

[!IMPORTANT] Tax rules do not retroactively change existing invoices. Past invoices keep the tax that was calculated at creation time.

How Tax Is Applied#

When an invoice is generated, TaxService runs the following logic:

1. Look up the client's country from their billing address.
2. Find matching tax rules for that country.
3. Check whether the client is tax-exempt (see below).
4. If not exempt, calculate line_item_total × rate / 100 and insert a tax line.
5. Store the tax amount as a separate BIGINT cents column (tax_amount) alongside the subtotal.

The tax line appears on both the rendered invoice and the PDF as a separate row:

Subtotal         $100.00
VAT 20%           $20.00
─────────────────────────
Total            $120.00

EU Reverse Charge (B2B)#

For EU-based clients who are VAT-registered businesses, the reverse charge mechanism removes the obligation to charge VAT on B2B cross-border services.

To mark a client as eligible for EU reverse charge:

1. Open the client record (Admin → Clients → [client]).
2. Tick Tax Exempt.
3. Enter their VAT Number in the Tax ID field.
4. Save.

Their invoices will show no tax line. The PDF prints "VAT Reverse Charge Applies" in the totals area when tax-exempt is active and a VAT number is present.

Tax-Exempt Clients#

Any client can be marked tax-exempt regardless of country — useful for resellers, government entities, or non-profits.

1. Open the client record.
2. Tick Tax Exempt.
3. Optionally enter a reason or exemption reference in the Tax ID field.
4. Save.

[!WARNING] Tax exemption is a manual toggle. Commerce does not automatically verify VAT numbers against the EU VIES database. You are responsible for validating client-supplied VAT numbers before granting exemption.

Exporting Tax Data#

For VAT return filing or accountant handoff:

1. Go to Admin → Reports → Tax Summary.
2. Select the date range and currency.
3. Click Export CSV.

The export contains: invoice date, client name, country, tax rule name, net amount, tax rate, tax amount, gross amount. One row per tax line per invoice.