> ## Documentation Index
> Fetch the complete documentation index at: https://docs.payreque.st/llms.txt
> Use this file to discover all available pages before exploring further.

# Tax Exemptions

> Manage tax-exempt status for B2B customers, non-profits, and international clients

# Tax Exemptions

Tax exemptions allow you to process orders and invoices without charging VAT/BTW for qualifying customers. This is essential for B2B transactions within the EU, exports, and dealings with non-profit organizations.

## Who Qualifies for Tax Exemption?

<CardGroup cols={2}>
  <Card title="EU B2B Customers" icon="building">
    Businesses in other EU countries with valid VAT numbers qualify for reverse charge (BTW Verlegd).
  </Card>

  <Card title="Export Customers" icon="globe">
    Customers outside the EU are exempt from Dutch/EU VAT on exports.
  </Card>

  <Card title="Non-Profit Organizations" icon="heart">
    Certain registered non-profits and charities may qualify for tax exemption.
  </Card>

  <Card title="Government Entities" icon="landmark">
    Government organizations and public institutions may be exempt from VAT.
  </Card>
</CardGroup>

## Enabling Tax Exemption

### For Individual Customers

<Steps>
  <Step title="Open Customer Profile">
    Navigate to **Customers** in your dashboard and click on the customer you want to update.
  </Step>

  <Step title="Find Tax Settings">
    In the customer details panel, look for the **Tax Exempt** toggle in the business information section.
  </Step>

  <Step title="Enable Tax Exemption">
    Toggle the switch to enable tax exemption. The customer will now receive 0% tax on all future invoices and orders.
  </Step>

  <Step title="Add Documentation">
    Add a **Private Note** explaining why this customer is exempt (e.g., "EU VAT number verified: DE123456789").
  </Step>
</Steps>

<Info>
  Tax exemption applies immediately. Any new invoices or orders for this customer will automatically have 0% tax.
</Info>

### Using Bulk Actions

To update multiple customers at once:

1. Go to **Customers**
2. Check the boxes next to customers you want to update
3. Click **Bulk Actions** button
4. Select **Toggle Tax Exempt**
5. Confirm the action

All selected customers will have their tax exemption status toggled.

## Visual Indicators

PayRequest makes it easy to identify tax-exempt customers:

### In Customer Lists

Tax-exempt customers display a badge:

* **Tax Exempt**: Green badge indicating exemption is active
* **Standard Tax**: Gray badge (or no badge) for regular customers

### On Customer Detail Pages

The customer profile shows:

* Tax exemption toggle status
* Country information (relevant for EU VAT rules)
* VAT number if stored

### On Invoices

When creating invoices for tax-exempt customers:

* All line items show **0%** tax rate
* Invoice displays **"BTW VERLEGD"** (Tax Reversed)
* Total excludes tax automatically

## How Tax Exemption Affects Different Areas

### Shopping Cart & Checkout

When a tax-exempt customer shops in your store:

| Without Exemption  | With Exemption     |
| ------------------ | ------------------ |
| Product: €100.00   | Product: €100.00   |
| BTW (21%): €21.00  | BTW (0%): €0.00    |
| **Total: €121.00** | **Total: €100.00** |

The cart automatically detects the customer's exemption status and adjusts calculations.

### Invoice Creation

When creating an invoice for a tax-exempt customer:

1. System automatically sets tax rate to 0% for all items
2. Invoice header/footer can show "BTW Verlegd" note
3. No manual intervention needed

### Subscriptions

Existing subscriptions for a customer who becomes tax-exempt:

* Future billing cycles will use 0% tax
* Past invoices remain unchanged (for audit purposes)
* Recurring amount stays the same (customer saves the tax portion)

### Orders

New orders placed by tax-exempt customers:

* Order total calculated without tax
* Order confirmation shows 0% tax breakdown
* OrderItems stored with 0% tax rate

## VAT Number Storage

For EU B2B customers, store their VAT number for compliance:

### Adding VAT Information

1. Open the customer profile
2. Navigate to **Business Information** section
3. Enter:
   * **VAT Number**: The customer's EU VAT number (e.g., DE123456789)
   * **Country**: The customer's country
   * **Company Name**: Legal business name

<Warning>
  Always verify VAT numbers before applying tax exemption. Use the EU's [VIES VAT validation service](https://ec.europa.eu/taxation_customs/vies/) to check validity.
</Warning>

### VAT Number Validation

PayRequest stores validation information:

* `vat_number_valid`: Whether the number passed validation
* `vat_number_validated_at`: When validation was performed
* `vat_company_name`: Company name returned by validation
* `vat_company_address`: Address returned by validation

<Tip>
  Keep records of your VAT validations. Tax authorities may request proof that you verified customer VAT numbers before applying reverse charge.
</Tip>

## Reverse Charge (BTW Verlegd)

When selling to EU businesses with valid VAT numbers, the reverse charge mechanism applies:

### How It Works

1. **You sell** to an EU business (not in your country)
2. **You verify** their VAT number is valid
3. **You mark them** as tax exempt in PayRequest
4. **You invoice** them at 0% VAT
5. **Invoice shows** "BTW Verlegd" or "Reverse Charge VAT"
6. **Customer accounts** for VAT in their own country

### Requirements for Reverse Charge

To legally apply reverse charge, you must:

<Steps>
  <Step title="Verify VAT Number">
    Validate the customer's EU VAT number through VIES or similar service.
  </Step>

  <Step title="Confirm Different Country">
    The customer must be in a different EU country than your business.
  </Step>

  <Step title="Document the B2B Nature">
    The transaction must be business-to-business, not B2C.
  </Step>

  <Step title="Include Required Invoice Text">
    Invoice must mention "Reverse Charge" or "BTW Verlegd" and show 0% VAT.
  </Step>
</Steps>

### Invoice Requirements

For reverse charge invoices, ensure your invoice shows:

* Your VAT number
* Customer's VAT number
* Text: "BTW verlegd" or "VAT reverse charge applies"
* 0% VAT rate on all items

## Export Sales (Outside EU)

For customers outside the European Union:

### Automatic Detection

PayRequest recognizes non-EU countries and can apply 0% tax for exports.

### Manual Setup

1. Set customer's **Country** to their non-EU location
2. Mark customer as **Tax Exempt**
3. Add note: "Export - customer outside EU"

### Export Invoice Requirements

Your export invoices should include:

* Clear indication this is an export sale
* Customer's full address (outside EU)
* 0% VAT rate with explanation

## Best Practices

<AccordionGroup>
  <Accordion title="Document Everything">
    For each tax-exempt customer, record:

    * Why they qualify for exemption
    * Date exemption was verified
    * VAT number validation results (for EU businesses)
    * Any supporting documentation received

    Use Private Notes on customer profiles to store this information.
  </Accordion>

  <Accordion title="Regular Reviews">
    VAT numbers can become invalid. Schedule periodic reviews:

    * Revalidate EU VAT numbers annually
    * Check if business customers are still operating
    * Verify non-profits maintain their exempt status
  </Accordion>

  <Accordion title="Train Your Team">
    Ensure anyone creating invoices understands:

    * How to verify VAT numbers
    * When to apply tax exemption
    * What documentation to collect
    * How to handle edge cases
  </Accordion>

  <Accordion title="Audit Trail">
    PayRequest maintains an activity log of changes. Keep your records up to date:

    * Note when exemption was enabled/disabled
    * Record reasons for changes
    * Store validation screenshots or exports from VIES
  </Accordion>
</AccordionGroup>

## Frequently Asked Questions

<AccordionGroup>
  <Accordion title="Can I apply tax exemption retroactively?">
    Tax exemption only applies to new invoices and orders. Past invoices are not automatically updated (this is correct for accounting purposes). If you need to correct a past invoice, you may need to issue a credit note and new invoice.
  </Accordion>

  <Accordion title="What if a customer's VAT number becomes invalid?">
    If you're notified that a customer's VAT number is no longer valid:

    1. Disable their tax exemption
    2. Contact the customer to verify their VAT status
    3. Re-enable only after confirming a valid number
    4. Document the change in their profile
  </Accordion>

  <Accordion title="Can different products have different exemption rules?">
    Tax exemption is applied at the customer level, not product level. When a customer is tax exempt, all products they purchase are at 0% tax. If you need per-product rules, consider creating separate customer records or using different product variants.
  </Accordion>

  <Accordion title="How do subscriptions handle exemption changes?">
    If you toggle tax exemption for a customer with active subscriptions:

    * **Enabling**: Future billing cycles will be at 0% tax
    * **Disabling**: Future billing cycles will include tax at the product's rate

    The change takes effect on the next billing cycle.
  </Accordion>

  <Accordion title="Do I need proof of export for non-EU sales?">
    While PayRequest handles the tax calculation, you should maintain proof of export (shipping documentation, delivery confirmations) for your records. Tax authorities may request this during audits.
  </Accordion>
</AccordionGroup>

## Compliance Checklist

Before applying tax exemption, verify:

<Steps>
  <Step title="Customer Qualification">
    Does the customer legally qualify for tax exemption?
  </Step>

  <Step title="Documentation">
    Do you have the required documentation (VAT number, export proof, etc.)?
  </Step>

  <Step title="Validation">
    Have you validated any VAT numbers through official channels?
  </Step>

  <Step title="Record Keeping">
    Have you recorded the exemption reason in the customer profile?
  </Step>
</Steps>

## Related Documentation

<CardGroup cols={2}>
  <Card title="Tax & VAT Guide" icon="receipt" href="/business-settings/tax-vat-guide">
    Complete guide to tax configuration in PayRequest
  </Card>

  <Card title="Customer Profiles" icon="user" href="/customer-management/customer-profiles">
    Managing customer information and settings
  </Card>

  <Card title="Creating Invoices" icon="file-invoice" href="/invoices/creating-invoices">
    How to create invoices with proper tax handling
  </Card>

  <Card title="Bulk Operations" icon="list-check" href="/organization-and-automation/bulk-operations">
    Update multiple customers at once
  </Card>
</CardGroup>

***

<Note>
  Tax exemption rules are complex and vary by jurisdiction. This documentation covers PayRequest's features. Consult with a tax professional for advice specific to your business situation.
</Note>