Tax on credits

[bargainhost]

How can you add VAT to credits? when I add credits the TAX shows 0.00

[penguin]

Their credit should not have VAT applied to it as credit is not a taxable service. Once they use this credit against a service/product purchase, VAT will then be shown on that invoice for the service/product.

[dexus]

I just tried this at 3.6.1 demo, and I see that VAT is not applied to credit invoice. I am not shure about UK, but in my country we have to add VAt to every invoice even a credit invoice.

[KayoteX]

it's not correct, i think.

Coz they will pay VAT twice.

[dexus]

No, they will pay VAT just first time when adding credit, and other invoices that will be generated for services on which that credit is applied will have amount to pay 0, so there is no need to pay anything for those invoices.

[tracktor]

I have the same problem, I need add the tax to invoice generated with the fuction "add funds"

 

in Spain this is necesary, all invoices need add taxes

[Zorro67]

In Australia, 10% GST (our name for VAT) must be included not only in all invoices but also in refunds, discounts and credits.

 

So if I have issue an invoice for $200, this would include $18.18 gst. If I later issue a credit for $200 , as a refund, if the tax isn't included (and stated) in the refund, the customer gets his $200 back (incl GST) but I won't be able to deduct that $18.18 from my tax liability.

 

Which means i'm out of pocket the cost of the tax on the complete sale.

 

Obviously the effect isn't as bad on affilliate fees or partioal refunds, but the effect is still the same.

 

So, my follow question to add to the mix is "do affillaite fees include tax"?

And if they do, is this included in (I mean, deducted from) tax in WHMCS?

[othellotech]

So if I have issue an invoice for $200, this would include $18.18 gst. If I later issue a credit for $200 , as a refund, if the tax isn't included (and stated) in the refund, the customer gets his $200 back (incl GST) but I won't be able to deduct that $18.18 from my tax liability.

 

*CREDIT* and Refund are very different things - you dont give the client a "credit" to their account *and* a refund

 

I've spoken to one of our Spanish customers, and *deposits* taken from clients for advance work do not have VAT applied to them, the VAT is dealt with when the *invoice* for the work is raised.

[Zorro67]

yes Rob, I agree they are different, payments and refunds are the financial transactions that result from financial instruments like invoices and credits.

 

In strict accounting terms, you give a cash refund or credit card re-imbursement against a credit invoice. In exactly the same way that a payment is recieved against an invoice.

 

Howver, stil awaiting some response to tax on credit invoice and affiliate fees.

 

perhaps like invoices, credits and affiliates just need a check box (like products) that says "Includes tax". that would cover those that need to include it, and those that don't.

[dexus]

perhaps like invoices, credits and affiliates just need a check box (like products) that says "Includes tax". that would cover those that need to include it, and those that don't.

 

Yes, I agree, there should be option for this.

[Serverweb]

Same BIG problem in ITALY:(

all payment must have an invoice therefore a TAX

[penguin]

Same BIG problem in ITALY:(

all payment must have an invoice therefore a TAX

 

That doesn't necessarily follow actually. In the UK for example, cetain products are tax exempt, for example children's clothes. You would still issue an invoice, however there is no applicable TAX. This would be the same for credits that customers add to accounts - you can provide an invoice, however it just has no tax applied. The tax is then applied to the actual service that they purchase.

[dexus]

This is still not implemented in 3.6.2

 

Adding credit to accounts is really nice feature, but it's really bad that some of us can't use it just because tax can't be applied.

[pckill]

I think that the best solution is that a customer add credit but not generated a invoice, only a payment confirmation and the funds is in the credit account.

By example, if a customer pay 100 € for your credit account, the system donot generate a invoice, only a payment confirmation.

 

Before, when the customer buy a product, now is the time to apply the TAX.

 

The system in the inverse that the customer not have credit account, first is the invoice, second the payment confirmation. In this case, first is the paymente confirmation and before the invoice.

 

Is not?

 

Sorry by my english, it's no good.

[Serverweb]

In ITALY:

1 payment= 1 invoice with same date

If you pay (add funds too) and i don't send you invoice, tommorrow i pay penalty to police.

 

better situation:

 

i add funds, i reveice invoice with TAX (no problem with police)

when i use credit i will don't receive invoice with tax, only (example) and email with

domain xxxxxx renew with your credit

[othellotech]

If you pay (add funds too) and i don't send you invoice, tommorrow i pay penalty to police.

 

If you open a savings account with your bank and pay money into it - they dont provide you with an invoice and they dont tax the amount - *CREDITS* in WHMCS work exactly teh same way - the determination on TAX is based on the invoices for items/services that the credit is applied to, not on the credit itself

 

e.g. I add $1000 to my account - no tax

I spend 500 of that on hosting which is taxd, invoice is generated for that hosting 500+tax=587.50, amount deducted from my credit =587.50, amount left is 412.50

I spend 200 on untaxed dutch biscuits, invoice is generated for those biscuits, 200, amount deducted from my remaining 412.50 is 200

 

*now* do you understand why the *credit* isnt taxed ??

[Zorro67]

This thread was starting to make no sense, so i went back & re-read from the beginning

 

I think this thread has a couple of different people with different views of the term credit, which is creating different points of view

1 type of "credit" is where a client pre-pays an amount against their account

The other type of credit, is a negative value invoice (similar to a refund, but no cash has actually changed hands yet), which might be the case for a refund, or affiliate-type credit.

 

Rob is correct if you are referring to example 1, whereas, i was referring to example 2.

 

Perhaps I'll open a separate thread for "applying tax to affiliate payments and refunds", which was my original question, to save any confusion.

[dexus]

Yes, but that is different in European countries that have a sequential invoicing. When client order a credit or anything else he will get a proforma invoice and when he pay that invoice he will receive a paid sequential invoice, and seqential invoice number will be increased and that invoice must have a TAX on it or you are braking a law. There is no way to have a paid sequential invoice without a TAX applied, so there must be some other way to add a credit and not to break law in most European countries...

 

Other logical way to add credit without TAX would be not to create invoice and not to increase sequential invoice number when that credit is added, but on the other side it is not legal to take any funds from client without giving him a sequential invoice, so that is also not an option.

 

So only logical and legal way to add a credit in EU countries that have sequential invoicing is to have a TAX on credit invoice, but than TAX shouldn't be applied to any invoices later when that credit is actually used. Those invoices will have amount due 0.00, so also TAX on those invoices should be 0.00, and that way TAX will be paid only once when adding credit and that would be the only legal way to do this in EU countries with sequential invoicing.

[othellotech]

Yes, but that is different in European countries that have a sequential invoicing. When client order a credit or anything else he will get a proforma invoice and when he pay that invoice he will receive a paid sequential invoice, and seqential invoice number will be increased and that invoice must have a TAX on it or you are braking a law. There is no way to have a paid sequential invoice without a TAX applied, so there must be some other way to add a credit and not to break law in most European countries...

 

I'm not aware of a single EU VAT country that doesnt have the concept of certain items being VAT free/exempt. What a client is "buying" with their credit "invoice" is *cash* - if someone buys 10 euros from you, you dont charge them 10 euros plus VAT ...

 

What you need in your circumstance is "prefunding" without the associated *invoice* which is interfering with the sequential numbering you need - if WHMCS added the option to supress "credits" invoice generation, that would solve your "issue"

[dexus]

Believe me, I would love this is that simple, but in some countries it's not.

 

It would not be legal to take money from someone and not give invoice for that payment. For example if some company want to add credit to account they would first need proforma invoice to be able to pay to us, after that they need to have printed and signed invoice in next 8 days after payment that will show where the money from their bank account went or they will have problem with law, and my company would also have problems because we didn't give invoice to client for his payment. What ever that payment is for there must be an invoice for it and that invoice must have a TAX on.

 

That is what other people from some other EU countries that have similar laws are trying to explain in this thread, and that is probably hard for you to understand, but that's the way it is...

 

I explained the only legal way, and all other companies in my country are working that way...

 

So only logical and legal way to add a credit in EU countries that have sequential invoicing is to have a TAX on credit invoice, but than TAX shouldn't be applied to any invoices later when that credit is actually used. Those invoices will have amount due 0.00, so also TAX on those invoices should be 0.00, and that way TAX will be paid only once when adding credit and that would be the only legal way to do this in EU countries with sequential invoicing.

[Serverweb]

I must delete "ADD credit" option.

I hate italian business:(

in USA is all more easy

 

Yestarday i talk about this problem with police and told me:

if you receive money, you must print invoice for that payment...

If your customer use this credit next year, we don't care....but you must make an invoice!

 

sorry for english!

[dexus]

Yes, exactly, in most European countries you must remove "Add Credit" option in WHMCS because it's illegal to use it this way.

[Serverweb]

i hope in V3.7.* Released, we can find solution