Sales tax rate for reverse charge?

Hello!

My app just tried to create an invoice via the API for a contact in the Netherlands.

First it tried with an ec_status of "EC Services". This was rejected due to the reverse charge migration so my code retried with an ec_status of "Reverse Charge". So far, so good.

This led to a new validation error: invoice_items.sales_tax_rate must be 0% for EC Services and Reverse Charge invoices. The sole invoice item did not have a sales_tax_rate; instead I was passing a sales_tax_status of "EXEMPT". This used to work with EC Services invoices.

Has this behaviour changed as part of the migration?

To create a reverse charge invoice, evidently I should now give an invoice item a sales_tax_rate of 0. Should I stop specifying the sales_tax_status?

I’m now also wondering about non-UK, non-EU contacts. To create an invoice for such a contact in should I keep specifying a sales_tax_status of "EXEMPT" and no sales_tax_rate?

Finally, when if ever would one use a sales_tax_status of "OUT OF SCOPE"?

I thought I understood what exempt and out-of-scope meant in the context of VAT, but now I’m not so sure!

Many thanks,
Andrew Stewart

Some guidance here from FreeAgent would be most welcome :slight_smile:

I’ve got quite a few invoices backed up now…

Many thanks,
Andrew

Hi Andrew,

Apologies on the delay in replying here.

Has this behaviour changed as part of the migration?

That particular behaviour of passing EXEMPT for sales_tax_status wasn’t supposed to change after the Reverse Charge changes, but it looks like it unintentionally has. We’re looking into fixing that issue now.

To create a reverse charge invoice, evidently I should now give an invoice item a sales_tax_rate of 0. Should I stop specifying the sales_tax_status?

While we’re looking at fixing the problem, you can get the same behaviour as before by removing the "sales_tax_status": "EXEMPT" line and adding in the "sales_tax_rate": 0 line.

Finally, when if ever would one use a sales_tax_status of "OUT OF SCOPE"?

The statuses we’re using here are the same ones described in our glossary here: What is outside the scope of VAT? - FreeAgent

Hope this helps.

Many thanks,
Gerard

Hi Gerard,

Thanks for getting back to me and for the answers to my questions.

That’s what I had concluded in the meantime but it’s reassuring to see you confirm it :slight_smile:

Yours,
Andrew

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