Calculating Tax Rate

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

Processing Orders within the EU

Orders inside the EU are subjected to Value Added Tax (VAT). The VAT rate differs per country and is dependent on the location of the printing service.

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

Processing Orders with other EU countries

If 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:

• The Service Partner is located within the EU

• The Shipping Address of the order is in the EU

• The Billing Address contains a Company Name

• The Billing Address contains a VAT ID

• The Country in the Shipping Address is different than the Country of the Printing Service

• The Country in the Billing Address is different than the Country of the Printing Service

How 3YOURMIND calculates VAT

Consider this example of an order:

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 (used by 3YOURMIND)

1. Calculate the tax for each item individually.

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

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: (5,80 € * 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.

Benefit:

• The tax calculation is correct in the last line.

Drawback:

• 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 €)

Processing Orders from the EU to non-EU countries

If the printing service is located inside the EU but the Shipping Address is outside the EU, no VAT will be added (0% VAT).

Processing Orders from non-EU countries

If the Printing Service is located outside the EU and the Billing Address of buyer is not in the same country as the Printing Service, no VAT will be added (0% VAT). (valid for software >= v3.18.4)

Orders within the US

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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