How VAT is calculated

This article explains how Bilify turns the lines you type into the subtotal, tax and total on a document, so you can predict every figure before you click Issue.

The short version#

1. Each line has a quantity, a unit price, an optional discount and a tax rate.
2. Bilify works out the line's net amount (quantity times unit price, minus the discount).
3. The tax for the line is the net amount times the line's tax rate.
4. Lines are grouped by tax rate into a Tax breakdown (base and tax per rate).
5. The document total is the subtotal plus the tax, except for reverse charge and advance invoices, which work differently (see below).

The totals under the lines update while you edit the draft. If you see Totals will appear once a document type, tax rates and at least one complete line are set., pick a document type and complete at least one line.

Lines, discounts and tax rates#

When you pick a saved product or service, Bilify fills in its default price and default tax rate. You can still change both on the line. See Add products and services.

Rounding: per line or once per document#

Every amount is rounded to two decimals (deni or cents), halves rounded up. Where the rounding happens depends on the document type:

• Rounded per line. Each line's net and tax are rounded first, then added up. The totals equal the sum of what each printed line shows. Offers (Offer) and pro-forma invoices (Pro-Forma Invoice) work this way.
• Rounded once per document. Lines are added up at full precision, and only the totals and the tax breakdown are rounded at the end. This is how the UJP e-Faktura system recalculates an invoice, so Bilify does the same for Invoice, Advance Invoice and Invoice (Article 32 reverse charge).

You cannot change the rounding of a document type. It is part of the type's definition, which Bilify sets per country.

Reverse charge (Article 32)#

On an Invoice (Article 32 reverse charge) the VAT is calculated per line for disclosure only. It is not added to the total, because the tax liability passes to the buyer.

• The Tax total on the document is zero.
• The draft shows Transferred tax (reverse charge) with the amount that was calculated.
• At issue, the legal note required by Article 32-a is printed in the footer with that amount filled in.

Read Article 32 reverse charge invoices for when to use this type.

Advance invoices#

On an Advance Invoice the amount you enter is the gross prepayment, VAT included. Bilify takes the VAT out of it instead of adding it on top:

VAT = amount x rate / (100 + rate)

For example, an advance of 11,800 MKD at 18% contains 1,800 MKD of VAT on a base of 10,000 MKD. The subtotal is always the total minus the tax, so the three figures always add up. See Advance invoices.

Custom tax percentages#

Choosing Custom on a line lets you type any percentage from 0 to 100 (for example 7.5) in Custom tax percent. Lines with different custom percentages get separate rows in the tax breakdown. Use this only when none of your country's rates fit, and check with your accountant first.

What is frozen when you issue#

While a document is a draft, Bilify recalculates it every time you change it. When you click Issue, Bilify calculates it one last time and stores the result. From then on the document never changes, even if a rate, a client or your company details change later. Frozen at issue:

• every line's tax percentage, net, tax and total,
• the subtotal, tax total, total and the tax breakdown,
• the legal notes (such as the Article 32 note) with their amounts,
• your company details and the client's details as they were that day,
• the payment details of the chosen payment method,
• the exchange rate, for documents in a currency other than your company's,
• the document design.

To correct an issued document you cancel it or, for e-Faktura invoices, issue a storno or correction. See Cancel a document.