Taxes are used for accurately calculating and applying taxes to invoices, ensuring compliance with tax regulations, and streamlining tax collection and reporting.

THE ESSENTIALS

Taxes are automatically applied when invoicing contacts for physical goods and services they order from your business. A Tax includes a rate, a code that designates its behaviour, a number of products and locations conditions that must be met to apply the tax.

Taxes are applied based on a contact’s Billing Address, set on the Account being invoiced and when non is specified, the Country of agreement is used. For more complex taxation policies, you can differentiate taxes per location within a country.

Taxes are grouped in Tax Regions, areas with similar taxation policies and legislation, allowing thus your business to differentiate your policies per region.

Let’s look as some basic terms:

Tax Code

The Tax Code denotes how a Tax should be configured and applied. The supported codes are:

VAT - Up to one VAT tax can be applied per invoiced product
Sales Tax - Multiple Sales taxes might be applied when invoicing a product
Tax Exempt - Only a single Tax can be configured with this code and it can only be applied if a contact or product are Tax exempt ones.

Tax Model

The Tax Model determines whether your prices will include Taxes or not (Tax Inclusive or Exclusive). The default Tax model is set by default when creating a new price, but it can be overridden per price allowing you to set up complex pricing policies. The Tax Model can also be differentiated per region.

Tax Regions

A Tax Region groups countries with similar taxation regulations, like the EU or US. Therefore you can manage tax policies differently within each region - for example, set up a different tax model or a different Tax registration number per region. For each country within a region, set up one or more Taxes.

Tax Exempt

Tax Exemption indicates that a contact will not be charged for any taxes. CRM.COM supports tax exemption at two levels; Contacts and Products. Contacts are explicitly marked as Tax Exempt, whereas all Products not subject to taxation are included in a dedicated Tax with the corresponding code.

Managing Taxes

To view or create Taxes, navigate to the Financials Settings screen via Settings > Financials > Financials > Taxes.

On the Taxes summary screen, you can define your business's default Tax Model.

Tax Inclusive - Product prices include all taxes. During invoicing, the taxed amount(s) is deducted from the price to set the correct price per unit and net amounts.
Tax Exclusive - Product prices do not include taxes. During invoicing, the taxed amount is added to the price.

Click on the view (eye) icon to view the Tax Regions.

Tax Regions

Edit the existing Default tax region, or create a new one and include one or more countries.

A Default Tax Region is pre-configured during business sign-up. You can amend it to include at least your base Country.

Configuration mode - Only Manual configuration is currently available, i.e., you must manually set up taxes for each country in a region.
Countries - The countries that can be added are those configured in Countries (Settings > Platform > Generic > Countries).

Creating Taxes

When a Tax Region is created, select Manage Taxes of the respective country to create its Taxes.

Select the Create Tax option.

Set as Default - The default Tax is used when the system can’t find a specific Tax to apply - usually when the Contact has no billing address. Each country can have only one default Tax, which is automatically set when the first Tax is created for that country.
Name - Provide a unique name to identify the Tax.
Description - Optionally, set a description.
Rate - Provide the tax percentage. For tax-exempt rates, it can only be set to 0%.
As of date - Specify the date when the tax becomes effective. By default, this field is left blank when creating a new tax, meaning the rate is always considered valid. You can update it later or set a future date to reflect planned tax changes.

It is important to note that when taxes are applied, CRM.COM always applies the tax rate that is valid on the date the financial transaction is posted.

Tax Code - Select one of the available codes
Supply Method - If the Tax applies to one or more specific supply methods (for the purpose of ordering), then select those to which it applies.

Product Conditions

A Tax can be configured to apply to specific products by specifying either individual ones (based on their SKUs) or their product family.

Select Add Product / Add Family and choose the relevant item.

If no Products or Families are included for a Tax, then that Tax’s set up is considered incomplete and will not be applied during invoicing.

Location Conditions

Taxes can be set to apply only to specific locations where Contacts reside (based on their Billing address). Use Add Location to define one or more location conditions. If no locations are added, the Tax applies to all areas of that country.

Deleting a Tax

A Tax can only be deleted if it hasn't been used for invoicing yet.

Reference Material

You may also find it useful to refer to the following manuals for further reading about Taxes.

Contacts

Product Catalogue

Pricing

Financials

TABLE OF CONTENTS

- 1.1 THE ESSENTIALS
  - 1.1.1 Tax Code
  - 1.1.2 Tax Model
  - 1.1.3 Tax Exempt
2 Managing Taxes
- 2.1 Tax Regions
- 2.2 Creating Taxes
  - 2.2.1 Product Conditions
  - 2.2.2 Location Conditions
- 2.3 Deleting a Tax
3 Reference Material
- 3.1 Contacts
- 3.2 Product Catalogue
- 3.3 Pricing
- 3.4 Financials