VAT on invoices

This page explains how the tax on an invoice line is decided:

• what the VAT (%) field accepts;
• which codes you can use instead of a rate;
• where the rate comes from when you do not type one;
• how lines and delivery costs taken from an order get their rate;
• what an exempt line needs on the invoice.

Where to find it: Finance → Invoicing — the VAT (%) field on each line of a draft. The seller's own settings are on Finance → Sales entities: Default VAT rate (%) and the section VAT on invoices.

When you'll use it

• Entering a rate with a fraction, such as 25.5 or 8.1.
• Billing something exempt, out of scope, sold to another EU country or exported.
• Selling from a company whose usual rate is not the country's standard one.
• Working out why an invoice made from a shop order shows a different tax than you expected.
• Checking what rate a delivery cost will be billed at.

Key concepts

What the VAT (%) field accepts

On an invoice line, the field takes a rate from 0 to 100 with at most two decimal places, or a code. Use a comma or a dot: 25,5 and 25.5 are the same rate. The empty field shows 23 or zw, and its hint lists the codes.

You type	What happens
23, 8,5, 0	Accepted as a rate.
zw, np, 0wdt, …	Accepted as a code, in capitals or small letters. Spaces and dots are ignored, so 0 WDT is the same as 0wdt.
A third decimal, a value over 100, a minus sign, a second comma	The keystroke is refused and the field keeps its previous content.
A letter that does not start a code	The keystroke is refused.
Letters, spaces or % next to a number	Removed as you type: pasting VAT 8,1% leaves 8,1.

When you leave the field, the text is tidied (25, becomes 25, 8,10 becomes 8,1).

Default VAT rate (%) on a sales entity (your invoicing company) follows the same rules for rates. It does not take codes.

Codes instead of a rate

A line can carry a code instead of a rate. A line with a code has no tax, so its gross equals its net.

Code	Shown as	Meaning
0kr	0% domestic	0% rate in the seller's country.
0wdt	0% intra-EU	Intra-Community supply of goods at 0%. The buyer needs an EU VAT number from another EU country.
0ex	0% export	Export of goods at 0%.
zw	exempt	Exempt from VAT. The invoice must state the legal basis. See The exemption basis.
np	out of scope	A supply outside Poland, not subject to Polish VAT.
np2	out of scope II	A service for a taxable person in another EU country. The buyer accounts for the tax and needs an EU VAT number from another EU country.
oo	reverse charge	Domestic reverse charge. The buyer accounts for the tax.

A line with a code is shown in its own row of the VAT breakdown. It is never merged with the 0% row. See also the VAT code entry in the glossary.

Typing a code. Clear the VAT (%) field and type the code. While you type the first characters, the line keeps its previous rate. Once the code is complete, the line's gross drops to its net. If you leave the field with an unfinished code, the field shows the line's previous rate again.

The exemption basis

An invoice with an exempt (zw) line must state the legal provision under which the exemption applies. The form then shows the section VAT exemption basis:

• Type of basis — a provision of the national VAT act or a regulation, a provision of EU Directive 2006/112/EC, or another legal basis;
• Provision or basis — the text, up to 256 characters.

If you leave both fields empty, Complaia takes the default basis from the seller entity when you issue. Set that default on the sales entity, in the section VAT on invoices. Without a basis on the invoice or on the entity, the invoice is not issued.

An empty rate

An empty rate means different things in different places:

Where	What an empty rate means
VAT (%) on an invoice line	A new line never starts empty: it is filled in with the seller's fallback rate. An empty field is one you cleared yourself.
Default VAT rate (%) on a sales entity	The standard rate of the entity's country is used.
A VAT rate on an order line	The rate is not stated. When an invoice is built from the order, the line takes the seller's fallback rate.

So on an order line, an empty rate is not the same as a rate of 0.

The fallback rate

When a line has no rate of its own, Complaia uses the seller's fallback rate. This is the entity's Default VAT rate (%) if one is set, and otherwise the standard rate of the entity's country.

• A new line you add by hand starts with this rate.
• A line added from the catalog starts with the product's own default VAT rate if the product has one, otherwise with the fallback rate.
• A line built from an order line that has no rate is taxed at the fallback rate.

Standard rates by country

Complaia knows the standard rate of every country you can choose for a sales entity. These are all European Union member states and, among others, the United Kingdom, Norway, Switzerland, Ukraine, Turkey, Canada and the United States. Two entries need an explanation:

• the United States is 0%, because there is no federal VAT;
• Canada is 5%, the federal rate only.

When you choose the country on the entity form, Default VAT rate (%) shows the country's standard rate. You can type your own.

If a seller's country has no known standard rate and the entity has no default rate, Complaia does not tax a line without a rate at 0%. It refuses to build or save a document that contains such a line.

The delivery line

When an invoice is built from an order with a delivery cost, the cost becomes its own line. On a consolidated invoice there is one delivery line per order. The rate is decided like this:

1. If the order has its own Delivery VAT rate, that rate is used. When it differs from the rates of the goods in the order, the draft shows a note, so you can check it.
2. Otherwise the delivery cost follows the goods. When all goods of the order have one rate, the delivery gets that rate. When they have different rates, the delivery is split into several lines, one per rate, in proportion to the net value of the goods. Services are left out of this split.
3. If no rate can be found, the seller's fallback rate is used.

The delivery amount itself is taken from the order exactly. The parts of a split delivery add up to it.

Lines from an order

How the amount of an order line is read depends on the tax information the line has:

The order line	How it is billed
Comes from a connected shop and has no VAT information	The amount is what the customer paid, so it is taken as gross. The tax is worked back out of it at the fallback rate.
Has both a net amount and a tax amount	The gross (net plus tax) is taken exactly as it stands.
Was typed by hand with an empty rate	The amount is net, and the fallback rate is added on top.
Has a rate or a code	Net, plus tax at that rate. A code is carried onto the invoice line.

The decision is made line by line, so one order can contain lines of each kind.

Polish sellers

Some rules apply only when the seller is a Polish entity:

• KSeF — an invoice that goes to KSeF (Poland's national e-invoicing system) can carry only the rates that KSeF accepts. The KSeF check before issuing lists any line with another rate. Other documents take any rate from 0 to 100. See KSeF.
• Cash accounting — a switch in the entity's VAT on invoices section. Turn it on if the entity settles VAT with the cash accounting method. Its invoices then carry that marking.
• Sales to consumers in other EU countries — under the EU One-Stop Shop (OSS) scheme, lines carry the VAT of the delivery country instead. See OSS returns.

The screen

📷 Screenshot to add: an invoice line with the VAT (%) field, and the Summary showing one VAT row per rate and a separate row for a code

On an invoice line, VAT (%) is next to Net price and Gross price. Changing the rate recalculates the price you did not type. If you typed the net price, the gross price changes. If you typed the gross price, the net price changes.

In the Summary, the form shows one VAT row per rate and one per code. The invoice page shows the same breakdown in its Summary card, and its line table shows each line's rate or code in the VAT column. An invoice with an exempt line also shows the Exemption basis.

On the sales entity (Finance → Sales entities), Default VAT rate (%) is the seller's fallback rate. While the field is empty, it shows Country standard: and the rate. The section VAT on invoices holds the default exemption basis.

Common tasks

Set a rate on a line

1. Open the draft and click Edit.
2. In the line, click VAT (%) and type the rate, for example 8 or 25,5.
3. Check the line's Net value and Gross value, then click Save.

To declare a zero rate, type 0, or one of the 0% codes if the reason must be shown.

Declare an exemption or another code

1. Open the draft and click Edit.
2. Clear the line's VAT (%) field.
3. Type the code, for example zw for exempt or oo for reverse charge.
4. For zw: fill in VAT exemption basis, or leave it empty to use the entity's default.
5. Check that the Summary shows a separate VAT row for the code with no tax, then click Save.

A correction starts with the codes of the document it corrects, so you do not need to type them again there. A line built from an order carries the order line's code, if it has one.

Give a seller its own default rate

1. Go to Finance → Sales entities and open the entity.
2. Click Edit.
3. Type the rate in Default VAT rate (%) and click Save.

The new rate applies to lines created from then on. Existing drafts and issued invoices keep their rates.

Set the default exemption basis

1. Go to Finance → Sales entities, open the entity and click Edit.
2. In VAT on invoices, choose the Exemption basis type and type the Basis for VAT exemption.
3. Click Save.

From now on, invoices with an exempt line take this basis when their own fields are empty.

Fix a rate that came from an order

If an invoice built from an order shows the wrong tax on a line, fix it in one of two ways.

On this document only

1. Open the draft and click Edit.
2. Correct VAT (%) on the line.

At the source

1. Edit the order and correct VAT (%) on its line, or its Delivery VAT rate.
2. On the draft, remove the order from Based on orders and choose Remove the lines.
3. Select the order again, so that its lines are rebuilt.

When it doesn't work

What you see	Why	What to do
I type a letter and nothing appears	The field already holds a number, or the letter does not start a code.	Clear the field and type the code.
After I left the field, my code was replaced by the old rate	The code was not finished.	Type the whole code again.
The field ignores a digit	The result would be over 100 or have a third decimal place.	Type a rate between 0 and 100 with at most two decimals.
Enter the basis for the VAT exemption	The invoice has an exempt line, and neither the invoice nor the entity has a basis.	Fill in VAT exemption basis, or set a default on the entity.
A message that the exemption basis is too long	The text has more than 256 characters.	Shorten it.
This invoice needs the buyer's EU VAT number with a country code other than PL	A line has 0wdt or np2, and the buyer has no EU VAT number from another EU country.	Add the buyer's EU VAT number, or change the code.
A message that the reverse charge marking applies only to a company	A line is marked so that the buyer accounts for the tax, but the buyer is an individual.	Choose Company, or remove the marking.
A message that the standard VAT rate of the seller's country is unknown	An order line has no rate, the entity has no Default VAT rate (%), and its country has no known standard rate.	Set the default rate on the entity, or fill in the rates on the order lines.
The delivery is split into several lines	The goods in the order have different rates, and the order has no Delivery VAT rate.	Nothing to fix. To use one rate, set the Delivery VAT rate on the order.
Two rows in the VAT breakdown look like the same rate	One of them is a code, which always has its own row.	Nothing to fix.

Permissions

To do this	You need
See rates and the VAT breakdown on a document	Finance: View
Set rates, codes and the exemption basis on a draft	Finance: Create
Set Default VAT rate (%) and the default exemption basis on a sales entity	Finance: settings

Related

• The invoice & money — how the lines become the document's totals
• Invoicing — creating invoices from orders and by hand
• Sales entities — where the default rate and the exemption basis are set
• OSS returns — VAT of the delivery country for consumers in other EU countries
• The order record — VAT rates on order lines
• Glossary — VAT code, net, gross