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Customer tax settings record the facts about a customer that determine how tax is applied to their invoices: the country they are taxed in, their tax or VAT ID, the rate to apply, the reason for that treatment (standard-rated, reverse charge, exempt, and so on) and the kind of tax. When you run Alguna Tax or an external tax provider, these settings feed the determination; when you run neither, the customer’s rate is applied directly. Set them on the customer profile before the first invoice is issued.
Customer Tax Settings card showing tax country, tax ID and tax rate

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Tax settings

These fields are set in the dashboard and returned on GET /customers/{id}. They are not writable through POST /customers or PATCH /customers/{id}.

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Configure in the dashboard

  1. Go to Customers → [Customer] and open Tax settings.
  2. Set the tax country and enter the tax ID if the customer has one.
  3. Set the tax rate as a percentage, or leave it at 0.00% if a tax engine determines it.
  4. Choose the tax reason and tax type.
  5. Save.

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Tax reasons

The reason is recorded against the invoice line, so an invoice under reverse charge shows zero tax with reverse_charge as the reason.
Keep the customer’s tax ID on file whenever you apply reverse_charge or customer_exempt. The treatment is yours to justify; Alguna records what you configure, it does not validate eligibility.

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EU VAT reverse charge

Reverse charge is applied by a tax rule, not detected automatically. With Alguna Tax, create a rule for the customer’s country at 0% with the taxability reason set to Reverse charge, and record the customer’s VAT ID on their profile. With an external provider, the provider determines the treatment and Alguna records what it returns.

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How the rate reaches the invoice

  1. The customer’s billing address and tax country give the location.
  2. If Alguna Tax is on, the matching rule for that location (and the selling legal entity) sets the rate and reason. If an external provider is on, the provider does. Otherwise the customer’s tax rate applies.
  3. Product-level tax_code on each product tells a tax engine how to classify the line.
  4. Tax is added on top of the line subtotal on the invoice:

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Troubleshooting

Tax not calculating — the customer needs a billing address with a country (and a tax country if it differs); check a tax rule exists for that location or that the provider is connected; check the product is not mapped to an exempt tax code. Wrong rate — check the customer-level rate is not overriding what you expect, and that the legal entity billing this customer has the right rules. Reverse charge not applying — confirm the rule for the customer’s country is set to reverse charge at 0%, the customer’s tax country matches it, and a tax ID is recorded.

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Next steps

Alguna Tax

Rules per legal entity and jurisdiction.

External Tax Providers

Let a provider determine tax.

Manage Customers

The profile these settings live on.

Customer Contacts

Who receives the invoice.