VAT and Tax on Your Documents

What this article covers

Every invoice and proforma the platform issues carries one tax rate, decided at the moment the document is created and then frozen onto it. This article explains exactly how that rate is chosen, what the per-client exemption does, what the platform does not decide for you, and how tax behaves alongside discounts, credit top-ups and setup fees.

All tax configuration lives in Settings → Billing → Invoicing → Tax Settings. That section is collapsed when the page loads — click its header to open it. See Billing for the surrounding page.

How the rate for a document is decided

The platform works through the following checks in order and stops at the first one that answers. There is no scoring and no blending: exactly one rate comes out.

1. Is this a credit top-up? Top-up documents are handled by their own switch, Apply VAT to Credit Deposits. When that switch is off — which is how the platform ships — a top-up is issued at 0% and marked exempt, and none of the checks below run. When it is on, the top-up continues through the same checks as any other document.
2. Is VAT switched on at all? If Enable VAT is off, every document is issued at 0% and marked exempt.
3. Is the client exempt? If the client record has VAT Exempt ticked, the document is issued at 0% and marked exempt. The client’s country is still recorded on the document, but no rate lookup happens.
4. What country is the client in? The country on the client record is turned into a two-letter country code. If the client has no country, or the country cannot be recognised, the document is issued at 0% — but not marked exempt.
5. Is there an active rate for that country? The country is looked up in the VAT Rates by Country table. If there is no row for it, or the row exists but its status is Inactive, the document is issued at 0% and not marked exempt.
6. Apply it. Otherwise the rate from that row is applied to the taxable part of the document.

Warning: the rate table starts empty. Until you add a row for a country and leave it Active, every client in that country is invoiced at 0%. If all your documents are coming out with no tax, this table is the first thing to check.

There is no fallback or default rate anywhere. “No matching active row” means 0%, silently. It is worth adding a row for every country you actually sell into, even if the rate you enter is 0, so that a deliberate zero is distinguishable from a missing one.

Two different kinds of zero

A document showing no tax can mean either of two things, and they print differently:

• Exempt — VAT is switched off platform-wide, the client is marked exempt, or it is a VAT-free top-up. The document records that it is exempt, and the customer sees the word Exempt where the tax amount would be.
• Zero-rated by omission — the client has no recognised country, or their country has no active rate. The document simply shows 0.00.

The per-client exemption

Open a client, find the Account card, and tick VAT Exempt. In read mode the same card shows a VAT row reading either Exempt or Standard, so you can see a client’s status at a glance.

The effect is absolute: from that point on, every new document for that client is issued at 0% and marked exempt, whatever their country and whatever the rate table says. It has no effect on documents already issued.

The exemption is the only lever the platform gives you for a client who should not be charged tax. Whatever your reason for granting it — a reverse-charge arrangement, an export outside your tax territory, a public body — the platform records the outcome, not the reason. Keep your own record of why each exemption was granted; your accountant will ask.

Set a client’s VAT Number as well when they have one, in the Contact card. The number is printed on their documents. It does not change their tax treatment — see the next section.

What the platform does not do

This section matters more than any other in this article. Two things an operator commonly assumes are happening are not happening, and assuming them will produce wrong invoices.

VAT registration numbers are not validated

VAT Number is a free-text field, on both the client record and your own company details. The platform stores whatever is typed and prints it on documents. It does not check the number against any tax authority register, it does not check its format or its check digits, and it does not confirm that the number belongs to the named company. A typo, an expired registration or an invented number will be accepted and printed exactly as entered.

If you rely on a customer’s registration status for your own tax treatment, verify the number yourself against the relevant authority’s register before you act on it, and keep the evidence.

No automatic cross-border treatment

The platform applies the customer’s own country rate to every customer, and that is the whole of it. Specifically:

• Your own company country is never compared with the customer’s. It appears on the document header and in accounting exports, and it plays no part in choosing the rate.
• Business customers and consumers are treated identically. Whether a customer has a VAT number on file changes nothing.
• There is no reverse charge, no intra-community zero-rating, no one-stop-shop scheme and no distance-selling threshold logic. No reverse-charge wording is printed on any document.
• A customer outside your tax territory ends up with no tax only because you have not configured an active rate for their country — not because a rule recognised them as being outside it.

In practice this means the country rate table is your tax policy. If your correct treatment for a given country or customer differs from “charge that country’s rate”, you have to express it yourself: leave the country out of the rate table, add it with a rate of 0, or tick VAT Exempt on the individual clients concerned.

Warning: confirm your tax treatment with your own accountant before you go live, and re-confirm it whenever you start selling into a new country. The platform issues the documents; it does not decide what is correct for your business, and nothing here is tax advice.

Configuring rates per country

In Tax Settings:

• Enable VAT — the platform-wide switch, described as Apply VAT to invoices. With it off, every document is exempt.
• VAT Number — your own company registration number, printed in the seller block on documents and in the client portal. The placeholder shows the expected shape, for example RO12345678.
• VAT Rates by Country — the rate table.

Adding a rate

1. Click Add Rate. An inline row appears with three boxes.
2. Country — the two-letter country code. It is limited to two characters and forced to upper case as you type.
3. Country Name — the name shown in the table.
4. Rate % — the rate as a percentage, so enter 19 for nineteen percent, not 0.19. Values from 0 to 100 are accepted, with two decimal places.
5. Click Add, or Cancel to abandon the row.

Editing, switching off and deleting

The table columns are Country, Code, Rate, Status and Actions.

• The pencil icon turns the name and rate into editable boxes; the check icon saves them. The country code itself cannot be changed — it is the key of the row. To correct a code, delete the row and add it again.
• The status badge is a button. Click it to switch a row between Active and Inactive. An inactive row stays in the table for reference but is ignored when a document is created, which means clients in that country are invoiced at 0%.
• The trash icon deletes the row, after a confirmation.

The table shows No VAT rates configured. Add a rate to get started. until you add the first row.

What happens to existing documents when you change a rate

Nothing. The rate, the country and the exempt flag are written onto each invoice and proforma when it is created, and the document keeps them for life. Changing, deactivating or deleting a rate affects only documents created afterwards.

The same applies to editing a document later: adding, removing or repricing a line recalculates the tax using the rate already stored on that document, never a freshly looked-up one. This is deliberate — a document you issued at last year’s rate must keep showing last year’s rate.

A document also keeps a snapshot of your company details and the customer’s details, including both VAT numbers, as they stood when it was issued. Correcting a customer’s address today will not rewrite the invoice you sent them in March.

Tip: because the rate is frozen at creation, a rate change made partway through a month applies from the next document onward. If you need a rate change to take effect on a specific date, make the change before that day’s renewal documents are raised — the nightly pass runs at 02:00 UTC. See Automatic Billing and the Service Lifecycle.

What is taxable, line by line

The platform stores one rate per document and a taxable flag per line. The tax is that one rate applied to the total of the taxable lines; lines that are not taxable are excluded from the base but still count towards the total the customer pays.

The product’s taxable setting

Each product carries a Taxable setting, shown in the product editor as a pill that switches between Taxable and Tax Exempt, with the note VAT is applied at checkout. Products are taxable unless you say otherwise. The setting is copied onto each line the product generates; it does not change the document’s rate, only which lines feed the tax calculation. See Products.

You can also tick or untick Taxable on an individual line when adding or editing a line on an invoice or proforma by hand.

Setup fees

Setup fees are billed as their own line — Setup Fee followed by the product or option name — and inherit the taxable setting of the product they belong to. A taxable product’s setup fee is taxed at the same rate as the product itself.

Add-ons and cross-connects

Add-ons bought as part of an order follow the parent product’s taxable setting. An add-on bought later, against a service that already exists, is charged as a taxable line — so if you sell tax-exempt products with add-ons, check the line before issuing the document and untick Taxable if it does not belong in the base.

Cross-connects carry their own flag, set in the cross-connect dialog by the +VAT tick-box next to the monthly cost. At renewal each active cross-connect with a monthly cost becomes its own line and is taxed or not according to that tick-box.

Discounts

Tax is calculated after the discount. A discount reduces the amount that tax is charged on, both at checkout and on every renewal that carries a recurring discount. The discount appears on the document as its own negative line.

Warning: if you edit the lines of a document that already carries a discount line, the tax is recalculated from the lines marked taxable, and the negative discount line is not one of them — so the recalculated tax is based on the pre-discount amount. Check the tax figure after saving any edit to a discounted document, and correct it by adjusting the lines if it is not what you intend.

Tax is always added on top

Every price in the platform is a net price. Product prices, setup fees, add-on prices and cross-connect monthly costs are all entered and stored without tax, and the document total is the sum of the lines plus the tax. There is no tax-inclusive pricing mode and no “prices include tax” option. If you advertise gross prices to consumers, you have to work backwards to the net figure yourself when you set the price.

Credit top-ups and hourly usage

Credit top-ups are the one place where tax behaves differently, so read this alongside Credit Balance.

• By default a top-up is issued VAT-free and marked exempt. The customer’s document reads Account Credit Deposit with no tax.
• Switch on Apply VAT to Credit Deposits in Settings → Billing → Automation → Credit Settings and top-ups are taxed at the customer’s country rate like anything else. Its description reads VAT calculated on Add Funds invoices based on user’s country.
• When top-ups are taxed, the credit the customer receives is the full amount they paid, tax included. A customer paying 119 for a 100 top-up at 19% ends up with 119 of credit.
• Hourly usage is deducted from the credit balance with tax already included. The transaction line reads Hourly charge followed by the service name and (incl. VAT). The same gross figure is used for the low-balance and monthly-cap calculations. See Hourly (Usage) Billing.

Note: taxing top-ups and then taxing the services the credit pays for is a decision with real consequences. Decide which of the two carries the tax with your accountant before you take the first top-up, because changing it later leaves you with two populations of documents.

What the customer sees

• On the PDF: your company’s VAT number in the seller block, the customer’s VAT number in the bill-to block, and in the totals a Subtotal line followed by VAT with the rate in brackets, for example VAT (19%). When there is no tax, the row reads VAT with the value Exempt for an exempt document, or a plain 0.00 otherwise.
• In the client portal, invoices and proformas show a VAT row with the rate in brackets and an (Exempt) marker where it applies. At checkout the figure appears as VAT, briefly showing Calculating… while it is worked out. Some checkout screens label the same figure Tax/VAT or Tax.
• Customers can enter and see their own VAT Number on their profile page. If you would rather they could not change it after signup, add VAT Number to Client Profile Lock in Settings → Billing → Automation.

In the admin panel the same figure appears on the invoice and proforma pages as a Tax total with the rate in brackets and an (Exempt) badge where relevant. See Invoice Details and Proforma Details.

Checklist before you issue your first invoice

1. Fill in Company Address, including Legal Company Name and Country, on the Invoicing tab. These print on every document.
2. Enter your own VAT Number in Tax Settings.
3. Confirm Enable VAT is on.
4. Add a rate row for every country you sell into, including a 0 row where zero is the intended answer, and make sure each is Active.
5. Decide with your accountant whether credit top-ups should be taxed, and set Apply VAT to Credit Deposits accordingly.
6. Check that your products carry the right Taxable setting.
7. Issue one test document and read the PDF end to end before you send a real one.

Related articles

Billing, Invoices, Invoice Details, Proforma Details, Invoice Export, Products, Client Details, Credit Balance, Hourly (Usage) Billing, Automatic Billing and the Service Lifecycle.