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The Agile ERP includes an integrated Tax Calculator that complies both with EU and US regulations.

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The default rate can be set up in Service Panel > Settings > General Settings

Processing Orders with other EU countries

In some casesIf both Service Partner and the foreign customer have a VAT identification number, VAT must be paid in the country where the so-called place of performance is located. In the case of transactions across national borders, the place of performance is shifted to the location of the recipient of the goods.

Therefore, an order will not contain any VAT (0% VAT) if all of the following conditions apply:

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Info

The Agile ERP will automatically check if VAT is applicable based on each order.

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How 3YOURMIND calculates VAT

Consider this example of an order:

What

Net Price

19% Tax

Gross Price

Line 1

1

3,

05 EUR

40 €

?

?

Line 2

3

2,

00 EUR

40 €

?

?

Total

5,00 EUR

?

?

?

To calculate the VAT, there are two legally valid methods of calculating the tax. The vertical and the horizontal method.

Vertical Method to calculating the tax

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(used by 3YOURMIND)

  1. Calculate the tax for each item individually.

  2. For the total prices, we create the sum for each column individually.

What

Net Price

19% Tax

Gross Price

Line 1

3,40 €

3,40 € * 0,19 ≈ 0,65 €

3,40 € + 0,65 € = 4,05 €

Line 2

2,40 €

2,40 € * 0,19 ≈ 0,46 €

2,40 € + 0,46 € = 2,86 €

Total

3,40 € + 2,40 € = 5,80 €

0,65 € + 0,46 € = 1,11 €

4,05 € + 2,86 € = 6,

11

91

Benefit:

  • Each item contains prices with 2 decimal places for net and gross.

  • For each column the total is the sum of all line prices

Drawback:

  • The tax on the total seems to be off: (5,00 80 * 0,19 19% = 1,10 € ≠ 1,11 €). This effect increases for high quantities and lower prices. Note, that although the tax seems to be not correct on the total, this method of calculating tax is legal and commonly used.

Horizontal Method to calculating the tax

  1. Calculate the tax for each item individually.

  2. Create the sum for the Gross price only

  3. Use the VAT rate to derive a Total net Price.

What

Net Price

19% Tax

Gross Price

Line 1

3,40 €

??

??

Total

5,80 €

5,80 € * 0

3,40 € * 0,19 ≈ 0,65 €

3,40 € + 0,65 € = 4,05 €

Line 2

2,40 €

??

??

2,40 € * 0,19 ≈ 0,46 €

2,40 € + 0,46 € = 2,86 €

Total

6,91 € - 1,10 € = 5,81 €

6,91 € *0,19 / 1,19 ≈ 1,10 €

4,05 € + 2,86 € = 6,

10

91

Benefit:

  • The tax calculation is correct in the last line.

Drawback:

  • The prices per line are not calculable with For the Net prices and tax column, the sum of the line prices are not equal to the total price (when using only 2 decimal digits). (e.g. 3,40 € + 2,40 € = 5,80 € ≠ 5,81 €)

Tip

Due to the fact that 3YOURMIND supports showing line prices both in NET and in GROSS for different users, 3YOURMIND uses the vertical method for calculating tax.
Hence the tax calculation may seem off on the first sight.

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The calculating tax within the US depends on a wide variety of factors from each state and municipality. The Agile ERP use taxjar.com to calculate appropriate Sales Tax. If you want to check that your tax is calculated correctly, you can use their state tax tool.

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https://www.taxjar.com/states/You can set individual customers of yours as tax-exempt via the admin panel user profile. Customers who are set to tax-exempt will not be charged US Sales tax when an invoice is created. A more detailed guide on how to set the US tax exempt flag for certain customers can be found here.

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