Value Added Tax (VAT) is a consumption tax on the value added to nearly all goods and services bought and sold in, and into the UK and European Union. It is charged as a percentage of the sale price; is applied at the point of sale, included on the invoice to the consumer (if applicable), and collected by the supplier.

There are specific tax rules that will determine the appropriate tax rates on orders. These rules can vary based on multiple factors, especially when handling import/export shipments; for instance where the customer is located or the country of origin for the goods being shipped, can impact if VAT applies.

When considering VAT charges, it isn't just when to apply charges, but also what type or percentage of VAT applies. Most countries have the following types of VAT %:

Keeping track of how and when to apply VAT can be complicated and time consuming. Automated calculations can help to improve invoice efficiencies and reduce potential errors when determining VAT rates.

Default Tax rates are configured at the time your tenant is created, and any modifications will typically be made as part of the initial onboarding. To view available tax types, navigate to Configuration and select the Accounting submenu. Scroll down to the Tax rates panel where a list of all the available tax rates will show.

In addition to the tax rates, it is possible to set a Base VAT rate, this is the rate that would typically apply unless one of the specific rules takes precedence. For some accounting integrations (Business Central / Multivers / Adfinity), both the base rate and the specific tax rate that is applied can be exported.

When adding a customer in Qargo, completing the VAT section in the customer profile can help to automate the VAT calculation on orders where that customer profile is used.

VAT Number

A VAT registration number is a unique number that identifies a taxable business (or person) or non-taxable legal entity that is registered for VAT.

Tax Type

VAT exceptions toggle

When set ON, this will automatically apply the appropriate tax exceptions for import / export orders.

When configuring Transport services and Surcharges / Extras the VAT for the sales invoice is mandatory. Creating a Rate Card, that uses any of the saved charges will include the VAT that was added to this charge. To avoid having to configure the VAT % separately for each rate card, this applies to both transport charges and any surcharges or extras that are set up.

Most countries have the following types of VAT %:

When determining the VAT to be used for the order, the first step is to check the VAT configuration on the customer profile:

When saved in the customer profile, the VAT number will show at the top of the order.

It is important that this is configured correctly. Based on the configuration on customer, Qargo will apply the following logic:

We will check in the rate card which % we should use. We will only do this if the customer falls under the VAT rules (Customer configuration is VAT), if the customer falls under reverse charge or No VAT then we won't apply this as those customers don't fall under the VAT rules.

This is often not the only factor in considering the appropriate tax to apply, it can also be dependent on the goods; where they will be picked up and ultimately delivered. When building an order it is possible to enter the consignment details for the country of origin.

When calculating VAT on an invoice, there are 2 calculation methods that can be set up in the CONFIGURATION > Accounting page. This is typically configured as part of the initial account configuration, and once set cannot be updated.

The 2 options available are:

Which option to select may be determined based on the accounting package used, as the rounding may impact matching how they calculate. Once configured reach out to the Qargo Account Manager for any changes.

The system can automatically determine the appropriate tax type to apply to the order. This is set in the customer profile with the 'Apply VAT Exceptions for Import/Export' toggled to ON.

Tax type is then determined based on:

The determination is based at the CUSTOMER level. Updating the customer will recalculate the tax. Changing the collection and delivery locations will not.

For Import / Export orders (containers) tax type is often determined based on the COUNTRY OF ORIGIN or COUNTRY OF DESTINATION of the goods, and not the collection or delivery locations. Under the consignment information, it is possible to add this information.

When adding a charge to an order, if the 'Set VAT Automatically' toggle is set to ON, the VAT % rate will be greyed out and unavailable.

Tax exceptions will be shown, if applicable when adding a charge in the order.