Summary
What: VAT logic for purchase invoices received from subcontractors in Qargo.
Why: Correct VAT configuration on subcontractor profiles ensures accurate cost accounting and tax compliance when processing invoices from carriers.
How: VAT is configured on the subcontractor profile, inherited by cost rate cards, and automatically calculated based on the subcontractor's country, the tenant's country, and the transport route.q
Prerequisites
Subcontractor profiles must be set up in Qargo.
Tax rates must be configured under CONFIGURATION > Accounting > Tax Rates and VAT configuration (typically completed during initial onboarding).
For automatic VAT determination, subcontractor VAT numbers must include the country code.
Terminology
Term | Definition |
Subcontractor | A third-party carrier engaged to perform transport on behalf of the Qargo tenant |
Purchase invoice | An invoice received from a subcontractor for transport services rendered |
Reverse charge | A VAT mechanism where the buyer (tenant) accounts for VAT rather than the supplier (subcontractor). Within the EU, reverse charge applies when the tenant and subcontractor are in different EU member states (Intra EU). In the UK, reverse charge exists as 20% and 0% variants; Qargo's UK reverse charge is planned but not yet implemented |
Intra EU | Transport between two EU member states |
Tenant | The transport company operating Qargo |
Transit (Art 41) | A VAT exemption that applies to transport services where goods cross an EU border |
No VAT | No VAT applies to the transaction |
VAT Configuration Defaults
Default tax rates are configured at the time the tenant account is created, and any modifications are typically made as part of initial onboarding. Note: EU tenants and UK tenants have separate tax rate configurations.
To VIEW available tax types:
NAVIGATE to Configuration > Accounting > Tax rates and VAT configuration.
CLICK down to the Tax rates panel, where all available tax rates are listed.
In addition to the tax rates, a Base VAT rate can be set. The base rate is used for the Reverse charge tax rate: a reverse charge invoice carries €0 VAT, but in accounting the VAT is booked both up and down at the original rate (for example, on a €100 invoice at 21%, €21 is booked up and €21 booked down — net €0, but registered on the correct VAT codes). The base rate communicates to the accounting package what the VAT would have been without reverse charge. Tax codes can also be added to each tax rate, which are passed through to the connected accounting software.
📚 Some accounting integrations (Business Central, Multivers, Adfinity) allow both the base rate and the specific tax rate applied to be exported.
VAT Configuration on the Subcontractor
Completing the VAT section in the subcontractor profile enables Qargo to automate VAT calculation when a subcontractor price is added to a trip. VAT is determined at that point, before the purchase invoice is created.
Path: Resources > Subcontractors, then SELECT the Subcontractor
VAT Number
A VAT registration number uniquely identifies a taxable business registered for VAT. VAT numbers added to the subcontractor profile must include the country code (for example, BE0123456789 or GB123456789).
Tax Type
Co-contracting: used when the subcontractor is operating under a co-contracting arrangement.
Intra EU (reverse charge): use when both the tenant and the subcontractor are inside the EU but in different countries. The reverse charge mechanism shifts the VAT accounting obligation to the tenant (buyer). Reverse VAT will appear as the description on the purchase invoice.
No VAT:
Use when the tenant is based in the EU and the subcontractor is based outside the EU.
Use when the tenant is based in the UK and the subcontractor is based outside the UK.
Other: use for transactions that do not fall under any of the standard categories listed above.
Transit: use if the pickup or delivery is outside the EU.
VAT: use if the subcontractor is based in the same country as the tenant.
VAT Exceptions Toggle
When set ON, Qargo automatically applies the appropriate tax exceptions for import/export orders involving that subcontractor.
When the toggle is set ON, the Tax type field is greyed out and cannot be modified manually.
‼️ VAT determination is all-or-nothing: either all charges use automatic assignment (toggle ON) or all use manual configuration (toggle OFF). If any charges require a fixed VAT setting — for example, a customs surcharge that should always be VAT exempt — turn the Apply VAT Exceptions for Import/Export toggle OFF for that subcontractor.
VAT Configuration on Cost Price List and Surcharges/Extras
Path: Rates > Cost calculation trip, then SELECT Default Subcontractor
When configuring subcontractor cost services and surcharges/extras, the VAT for the purchase invoice is mandatory.
Cost price lists that use saved charges include the VAT assigned to that charge.
This avoids having to configure the VAT % separately for each cost rate card.
Applies to both transport charges and any surcharges or extras.
VAT Calculations for Subcontractor Invoices
VAT Priority Logic
Subcontractor Tax type configuration takes precedence if set to Intra EU or No VAT: this overrides everything else.
Cost calculation trip VAT %: applied when no Tax type is set on the subcontractor profile (e.g. domestic subcontractors).
Qargo applies the following logic based on the subcontractor's configuration:
Subcontractor is Intra EU: VAT on the purchase invoice is set to reverse charge. Configuration on the cost rate card is ignored.
Subcontractor is No VAT: VAT on the purchase invoice is set to No VAT. Configuration on the cost rate card is ignored.
No Tax type set: Qargo uses the VAT % configured on the cost rate card directly. This is the typical path for domestic subcontractors in the same country as the tenant.
Stand-alone Charges on Purchase Invoices
Stand-alone charges added directly to a purchase invoice (i.e. not generated from a trip) always follow the tax type configured on the subcontractor profile.
Automatically Determine Tax on Subcontractor Invoices
When the Apply VAT Exceptions for Import/Export toggle is set to ON on the subcontractor profile, Qargo automatically determines the tax type on each purchase invoice.
📚 For domestic routes where both pickup and delivery are in the same country, VAT exceptions do not apply: the domestic VAT rate is used automatically.
Tax type is determined based on:
The country of the subcontractor, derived from the VAT number and billing address.
The trip pickup and delivery locations.
‼️ The VAT determination is made at the SUBCONTRACTOR level. Updating the subcontractor profile will recalculate the tax. Changing collection and delivery locations on the trip will not.
For import/export orders (containers), the tax type is based on the country of origin or country of destination of the goods rather than the collection and delivery locations. These values are recorded under the consignment information on the order, and are additional fields that must be enabled in the account configuration before they appear.
Country of origin and country of destination are set in one of two ways:
If the user enters these values on the consignment, those values are used.
If they are left blank, Qargo determines them automatically from the locations of the first and last stop of the consignment.
‼️ The Apply VAT Exceptions for Import/Export toggle must be set to ON on the subcontractor profile for the country of origin to influence VAT determination.
Calculating Total VAT Amount on Purchase Invoices
Two VAT calculation methods are available, configured in Configurations > Accounting. This is typically set during initial account configuration and applies account-wide, affecting all invoices for both sales and purchase.
The two options are:
Calculate VAT on invoice total: all charge lines are summed and VAT is applied to the total.
Sum VAT per charge line: VAT is calculated and rounded to 2 decimal places on each individual charge line.
‼️ The VAT calculation method is an account-wide setting. While it is technically possible to change the method on a single invoice, doing so will cause an error when posting to accounting. It is not possible to configure this setting per customer. Frequent changes can lead to inconsistencies across invoices and potential disputes.
💬 The appropriate method may be determined by the accounting package in use, as rounding differences can affect reconciliation. Contact a Qargo Account Manager for any changes.
Summary Guide for VAT Rules — Subcontractor (Purchase Invoice)
BE Tenant
Transport | BE subcontractor | EU subcontractor | Subcontractor outside EU |
Domestic (e.g. Antwerp - Ghent) | VAT | Reverse charge (Art 44) | No VAT |
Within EU, one stop in BE (e.g. Paris - Ghent) | VAT | Reverse charge (Art 44) | No VAT |
Within EU, no stop in BE (e.g. Paris - Berlin) | VAT | Reverse charge (Art 44) | No VAT |
Pickup outside EU, delivery inside EU (e.g. UK - Ghent) | Transit Art 41 / No VAT | Transit Art 41 / No VAT | Transit Art 41 / No VAT |
Pickup inside EU, delivery outside EU (e.g. Ghent - UK) | No VAT / Export (Transit Art 41) | Transit Art 41 / No VAT | Transit Art 41 / No VAT |
Transport outside EU (e.g. Switzerland - UK) | No VAT | Reverse charge (Art 44) | No VAT |
EU Tenant
Transport | Subcontractor in same country as tenant | EU subcontractor | Subcontractor outside EU |
Domestic | VAT | Reverse charge (Art 44) | No VAT |
Within EU | VAT | Reverse charge (Art 44) | No VAT |
Pickup outside EU, delivery inside EU | Transit / No VAT | Reverse charge (Art 44) | No VAT |
Pickup inside EU, delivery outside EU | Transit / No VAT | Reverse charge (Art 44) | No VAT |
Transport outside EU | No VAT | Reverse charge (Art 44) | No VAT |
UK Tenant
Transport | UK subcontractor | Subcontractor outside UK |
Domestic (e.g. London - Manchester) | VAT | No VAT |
Pickup outside UK, delivery inside UK (e.g. Antwerp - London) | No VAT (Transit) | No VAT |
Pickup inside UK, delivery outside UK (e.g. London - Antwerp) | No VAT (Transit) | No VAT |
Transport outside UK (e.g. Ghent - Amsterdam) | No VAT | No VAT |
Troubleshooting
Issue | Solution |
Domestic routes still showing full VAT despite import/export toggle being ON | VAT exceptions only apply to cross-border routes. Domestic routes (pickup and delivery in the same country) always use the domestic VAT rate. |
VAT-exempt lines on cost rate cards despite exceptions being disabled | Check and update default VAT rates in subcontractor cost rate cards. Misconfigured rate cards can result in VAT-exempt line items. |
Reverse charge not applying correctly for EU subcontractors | Enable the Apply VAT Exceptions for Import/Export toggle on the subcontractor profile and ensure reverse charge settings are configured correctly. |
VAT 0% showing on purchase invoice instead of VAT Exempt | This can occur due to how No VAT is mapped in the account configuration settings, or when automatic VAT rules override manual setups. Adjusting VAT mappings and toggling the relevant settings can address this. |