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Hi.
I am checking a double entry of Vat on my vat accounts, I wonder if this is the cause.
I am thinking that because of this calculation parameters (Vat on Vat), it is creating an entry for P_Electric and then calculate another entry for the P_Sample Vat group below.
Would you know how the VAT on VAT calculation works? I hope someone enlighten me. I am new to this type of combination.
Just to share, I am in US, even we don't have here "Tax on Tax". We have Sales tax here that varies State to State and then we have Local taxes that is based on state or county level to fund public services like garbage or sewer maintenance so as per US tax laws they have given combined rates (State + Local Taxes)
Hi Ramit,
Right but selling from an EU country to a third party country - such as the US - where sales tax is applicable is a tax free transaction. So, we need to wait for the response of the TeamFunctional.
Best regards,
Ludwig
Hi TeamFunctional,
Can you share the current outcome with an example and explain what the correct result should look like?
I agree, in EU we only work on VAT and input tax credit is applicable, might be they want to sell to countries where Sales Tax is applicable like US.
lets wait, we have shared the function how this works.
Right but still what is the business case?
I have not seen VAT on VAT tax calculations in EU countries.
I am really wondering which country needs that and whether the 'electric' tax is really a VAT or an expense that needs to be posted differently.
Would be great if we could get this clarified first before jumping into a possible solution/workaround.
Hello TeamFunctional,
I have tested this function and the results are as follows.
Your understanding is correct,
Check the above, The second line is for the VAT on VAT calculation, and it is calculating from the first line VAT and its correct.
After I have posted this looks correct entry, see below.
Can you show us if this is not the calculation is happening to you? if not then there is a mistake in setup, check your 2nd tax code and its value defined.
Check if the same tax code is duplicating some tax group or not.
If you don't have any customization, this must be setup issue.
share the results with us.
Hello TeamFunctional,
What is the requirement that you have?
Do you need to calculate VAT on top of another VAT?
Which country / region necessitates that and for what kind of transactions?
Would be great if you could elaborate because I have not heard that this is needed in an EU country.
Many thanks,
Ludwig
Hi Ramit,
Correct. So I use combination of vat group and item vat group.
Vat group is Domestic
Item Vat group has 2 vat codes = Vat 1 and Vat 2
Vat 1 - 10% computation is fine it goes to correct GL accounts.
Vat 2 - 25% the percentage calculation is based from the output amount of Vat 1; thus the Vat on Vat setup as seen on photo. The expected result should be posting the VAT entry of 25% however it creates another entry for Vat 10%.
I am not sure about the behaviour of Vat on Vat in the system, I tried to change setup but my invoice won't match on my tests. and this setup matches but creates double entries.
Alright, can you share how you are using your tax?
Are you using sales tax combination like sales tax group and item sales tax group and that combination is giving you the tax code, or you are using your tax directly in GL?
VAT on VAT is mostly used in county where the sales tax is used like Us, if I am not mistaken EU country use VAT only.
Hi Ramit,
It is for EU.
Best regards,
Kat
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