Taxes, VAT, reverse charge and tax notes

Tax rates

• Each invoice has Tax % and an optional Second tax %, applied to the lines ticked Tax / Tax 2. Defaults come from Settings.
• Discount % is taken off the subtotal before tax.
• Countries that name the document (Australia, Singapore, the United Arab Emirates, South Africa) print Tax invoice as the title when tax is charged.

Reverse charge (cross-border business clients)

1. 1

   Step 1: Make sure the client has its Country and Tax ID (VAT number) filled in.

2. 2

   Step 2: On a new invoice for an EU business client in another EU country, LockedHours ticks Reverse charge for you. Check it under Tax and legal details in Edit draft.

   The invoice then charges no tax and prints the reverse-charge mention for your country, for example the EU's Article 196 wording, or HMRC's wording for UK sellers.

Reverse charge needs the client's VAT number, a client in another country, and no tax on the invoice; the issue checklist tells you if one is missing.

Tax note (no VAT charged)

If you're in the EU and an invoice charges no VAT without being reverse charge (an exemption, a small-business scheme, a client outside the EU…), write the reason in Tax note, for example "Outside the scope of EU VAT — place of supply is outside the EU". The invoice can't be issued without it.

VAT in your national currency

In countries with VAT rules, when an invoice charges VAT in another currency (say USD from a German business), you must also state the VAT in your national currency. Edit draft then shows Exchange rate: 1 USD = ? EUR; fill in the rate of the day.

What's checked before issuing

• Your business name, address and country, and your tax number where your country requires it (always in the EU; when charging tax elsewhere).
• Legal details where required (France).
• The client's address and country on VAT invoices (and, while your business's country isn't set, on every invoice, so the whole list shows at once).
• Reverse charge and tax note rules, and the exchange rate, as above.