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Tax Management

Alguna provides comprehensive tax management to ensure your invoices are compliant with local and international tax regulations. Configure tax rates, handle multiple jurisdictions, and automate tax calculations.

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Tax Calculation Methods

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Alguna Tax

Built-in tax calculation based on configurable rules:

• Configure tax rates by region
• Automatic tax determination based on customer location
• Support for multiple tax types (VAT, GST, sales tax)

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Third-Party Tax Providers

Integrate with specialized tax services for automatic calculation:

• Stripe Tax - Automatic tax calculation
• Avalara - Enterprise tax compliance
• TaxJar - Sales tax automation

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Setting Up Tax Rules

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Creating a Tax Rule

1. Navigate to Settings → Tax → Tax Rules
2. Click Create Rule
3. Configure the rule:
   • Name: Descriptive name (e.g., “US Sales Tax - California”)
   • Tax Rate: Percentage (e.g., 7.25%)
   • Tax Type: Sales tax, VAT, or GST
   • Conditions: When this rule applies
4. Click Save

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Rule Conditions

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Combining Conditions

• Use AND logic: All conditions must match (e.g., country is US AND state is CA)
• Use OR logic: Any condition can match (create multiple rules with same result)

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Tax Types

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Value Added Tax (VAT)

Common in Europe and many other countries:

1. Navigate to Settings → Tax → Tax Rules
2. Create rule with Tax Type = VAT
3. Set rate (e.g., 19% for Germany)
4. Set conditions for when it applies

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Sales Tax

Common in the United States:

1. Navigate to Settings → Tax → Tax Rules
2. Create rule with Tax Type = Sales Tax
3. Set rate based on jurisdiction
4. Configure state-specific conditions

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Goods and Services Tax (GST)

Common in Australia, India, Canada:

1. Navigate to Settings → Tax → Tax Rules
2. Create rule with Tax Type = GST
3. Set applicable rate
4. Configure country conditions

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Tax Treatments

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Standard (Tax Charged)

Normal taxation where tax is calculated and added to invoices.

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Exempt

No tax charged when customer is tax exempt:

1. Navigate to Customers → [Customer]
2. Edit tax settings
3. Enable Tax Exempt
4. Enter exemption reason
5. Upload exemption certificate (if required)

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Reverse Charge

For B2B transactions where customer handles tax (common in EU):

1. Create a tax rule with 0% rate
2. Set Tax Treatment = Reverse Charge
3. Configure conditions (customer has valid EU VAT ID, different country than seller)
4. Add invoice note about reverse charge

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Zero-Rated

Tax rate is 0% but transaction is still technically taxable (e.g., exports):

1. Create rule with 0% rate
2. Set Tax Treatment = Zero-Rated
3. Add reason (e.g., “Export outside EU”)

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Customer Tax Settings

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Tax ID Collection

For each customer:

1. Navigate to Customers → [Customer]
2. Edit customer profile
3. Enter Tax ID (VAT number, EIN, etc.)
4. Enable Validate Tax ID for automatic validation

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Tax Exemption

Mark a customer as tax exempt:

1. Navigate to Customers → [Customer]
2. Edit tax settings
3. Toggle Tax Exempt on
4. Enter exemption reason
5. Add exemption certificate reference

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Tax ID Validation

Alguna can validate EU VAT numbers automatically:

1. Enter customer’s VAT number
2. System validates against EU VIES database
3. Invalid numbers are flagged for review

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How Tax Is Calculated

When an invoice is created:

1. Location determined - Customer’s country, state, city
2. Exemptions checked - Is customer tax exempt?
3. Rules matched - Find applicable tax rules
4. Rate applied - Calculate tax amount
5. Line item added - Tax appears on invoice

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Multi-Jurisdiction Setup

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Legal Entities

For businesses operating in multiple countries:

1. Navigate to Settings → Legal Entities
2. Create a legal entity for each jurisdiction
3. Set country and tax ID for each entity
4. Assign tax rules to each entity

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Tax Rules per Entity

Each legal entity can have different tax rules. For example:

• US entity with state-by-state sales tax
• German entity with EU VAT rules

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VAT Reverse Charge (EU)

For B2B transactions within the EU:

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Automatic Detection

When enabled, Alguna automatically applies reverse charge when:

• Customer is in the EU
• Customer has a valid VAT ID
• Customer is in a different country than seller

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Invoice Display

When reverse charge applies, invoices show:

• 0% VAT with “Reverse Charge” note
• Required legal text about VAT liability

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Tax Reports

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Viewing Tax Reports

1. Navigate to Reports → Tax
2. Select date range
3. Filter by country, tax type, or legal entity
4. View summary of tax collected

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Exporting for Filing

1. Navigate to Reports → Tax
2. Select the filing period (e.g., Q1 2024)
3. Choose jurisdiction
4. Click Export to download CSV for filing

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Common Configurations

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US Multi-State Sales Tax

Create rules for each state where you have nexus:

• California: 7.25%
• New York: 8.875%
• Texas: 6.25%
• Florida: 6.00%

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EU VAT

Create rules for each EU country with standard rates:

• Germany: 19%
• France: 20%
• Italy: 22%
• Spain: 21%
• Netherlands: 21%

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Best Practices

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Next Steps