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Tax Configuration for Invoices

PayRequest automatically calculates and displays taxes on your invoices based on your business settings, product configurations, and customer tax status. This guide explains how tax appears on invoices and how to configure it.

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How Invoice Tax Works

When you create an invoice, PayRequest:
  1. Checks the customer’s tax status - Is the customer tax exempt?
  2. Applies product tax rates - Each line item uses its product’s configured tax rate
  3. Calculates tax amounts - Based on tax-included or tax-excluded pricing
  4. Generates the invoice - With full tax breakdown for compliance
Tax settings are determined hierarchically: Customer exemption > Product tax rate > Business default rate

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Tax on Invoice Line Items

Each invoice item shows:
FieldDescription
DescriptionProduct/service name
QuantityNumber of units
Unit PricePrice per unit
Tax RateVAT/BTW percentage
Tax AmountCalculated tax for this line
TotalLine total including/excluding tax

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Example Invoice Breakdown

Standard Customer (21% BTW): 
┌──────────────────────────────────────────────────────┐
│ Invoice #2025-0042                                   │
│ Customer: Acme B.V.                                  │
├──────────────────────────────────────────────────────┤
│ Item              Qty    Price    Tax     Total      │
├──────────────────────────────────────────────────────┤
│ Web Hosting        1    €50.00    21%    €60.50      │
│ SSL Certificate    1    €25.00    21%    €30.25      │
│ Support Hours      3    €75.00    21%    €90.75      │
├──────────────────────────────────────────────────────┤
│ Subtotal (excl. BTW)              €150.00           │
│ BTW 21%                            €31.50           │
│ Total                             €181.50           │
└──────────────────────────────────────────────────────┘
Tax-Exempt Customer (BTW Verlegd): 
┌──────────────────────────────────────────────────────┐
│ Invoice #2025-0043                                   │
│ Customer: Euro Partners GmbH                         │
│ VAT: DE123456789                                     │
│ BTW VERLEGD                                          │
├──────────────────────────────────────────────────────┤
│ Item              Qty    Price    Tax     Total      │
├──────────────────────────────────────────────────────┤
│ Consulting        10   €100.00     0%   €1,000.00   │
├──────────────────────────────────────────────────────┤
│ Subtotal                          €1,000.00         │
│ BTW (Verlegd)                          €0.00         │
│ Total                             €1,000.00         │
└──────────────────────────────────────────────────────┘

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Configuring Tax Rates

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Business Default Tax Rate

Set your default tax rate in Settings > Tax & Currency:
1

Navigate to Settings

Go to Settings in your dashboard sidebar.
2

Open Tax & Currency

Click on the Tax & Currency tab.
3

Set Default Rate

Enter your standard tax rate (e.g., 21 for 21% Dutch BTW).
4

Save Changes

Click Save to apply the new default rate.
This default rate is used when:
  • Creating new products (as their initial tax rate)
  • Adding manual invoice items without a product reference

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Per-Product Tax Rates

Each product can have its own tax rate that overrides the default:
  1. Go to Products > [Select Product] > Edit
  2. Find the Tax Settings section
  3. Set the Tax Rate for this product
  4. Toggle Tax Included if the price includes tax
21% Standard Rate (Algemeen tarief)
  • Most goods and services
  • Software licenses
  • Consulting services
  • Digital products
9% Reduced Rate (Verlaagd tarief)
  • Books and e-books
  • Food products
  • Medications
  • Hotel accommodations
  • Cultural events
0% Zero Rate (Nultarief)
  • Exports outside EU
  • Intra-EU B2B supplies
  • Certain medical services

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Tax Included vs Excluded

When Tax Included is enabled on a product:
  • The price you set is what customers see
  • Tax is calculated backwards: Tax = Price - (Price / (1 + Rate/100))
  • Better for consumer-facing pricing
Example:
  • Price set: €121.00
  • Tax rate: 21%
  • Tax calculation: €121 - (€121 / 1.21) = €21.00
  • Net amount: €100.00

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Tax Excluded (Common for B2B)

When Tax Included is disabled:
  • The price you set is the net price
  • Tax is added on top: Tax = Price × (Rate/100)
  • Common for wholesale/B2B pricing
Example:
  • Price set: €100.00
  • Tax rate: 21%
  • Tax calculation: €100 × 0.21 = €21.00
  • Total: €121.00

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Creating Invoices with Tax

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Manual Invoice Items

When adding items manually to an invoice:
  1. Enter the item description
  2. Set quantity and unit price
  3. Select the tax rate from dropdown
  4. Toggle tax included if needed
PayRequest calculates the totals automatically.

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Product-Based Invoice Items

When adding a product to an invoice:
  1. Select the product from the dropdown
  2. The product’s tax settings are applied automatically
  3. Tax rate and inclusion settings come from the product
  4. Adjust quantity as needed

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Handling Mixed Tax Rates

An invoice can contain items with different tax rates. PayRequest:
  • Calculates tax per line item
  • Shows a tax breakdown by rate in the invoice
  • Totals all amounts correctly
Example with Mixed Rates: 
┌─────────────────────────────────────────────────┐
│ Tax Breakdown:                                  │
├─────────────────────────────────────────────────┤
│ 21% BTW over €200.00            €42.00         │
│  9% BTW over €50.00              €4.50         │
│  0% BTW over €25.00              €0.00         │
├─────────────────────────────────────────────────┤
│ Total BTW                       €46.50         │
└─────────────────────────────────────────────────┘

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Customer Tax Exemption

When a customer is marked as Tax Exempt:

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Automatic Behavior

  • All invoice items are set to 0% tax
  • Invoice displays “BTW VERLEGD” indicator
  • Tax totals show €0.00
  • Customer is not charged any VAT

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Manual Override

Even for tax-exempt customers, you can manually adjust tax rates on specific invoice items if needed (though this is rarely required).
Be careful when manually overriding tax for exempt customers. This should only be done in special circumstances with proper documentation.

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Invoice PDF Tax Display

Your invoice PDFs include:

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Header/Footer

  • Your business VAT number
  • Customer’s VAT number (if applicable)
  • “BTW Verlegd” notice for reverse charge

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Line Items

  • Each item shows its tax rate
  • Tax amounts calculated per line

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Summary Section

  • Subtotal (excluding tax)
  • Tax breakdown by rate
  • Total amount
  • Payment instructions
For EU VAT compliance, your invoices should show:

Your Business Info

  • Business name and address
  • VAT/BTW registration number
  • KvK number (Dutch companies)

Customer Info

  • Customer name and address
  • VAT number (for B2B reverse charge)
  • Country

Invoice Details

  • Unique invoice number
  • Invoice date
  • Payment due date
  • Currency

Tax Information

  • Tax rate per line item
  • Tax amounts
  • Total tax
  • Reverse charge notice if applicable

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Editing Invoice Tax

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Before Invoice is Sent

You can freely edit:
  • Tax rates on any line item
  • Tax included setting
  • Add or remove items

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After Invoice is Sent

Editing sent invoices affects your accounting records. If significant changes are needed, consider issuing a credit note instead.
Minor corrections are allowed, but changing tax rates after sending may require:
  • Notifying the customer
  • Updating your accounting records
  • Potentially issuing a corrected invoice

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Tax in Invoice Templates

Customize how tax appears in your invoice templates:

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Available Template Variables

VariableDescription
{tax_subtotal}Total before tax
{tax_amount}Total tax amount
{tax_rate}Applied tax rate (%)
{invoice_total}Grand total including tax
{tax_exempt_notice}”BTW Verlegd” text if applicable

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Customization Options

In Settings > Invoice Settings, you can:
  • Add custom footer text for tax notices
  • Include payment terms
  • Add reverse charge statements
  • Customize the tax breakdown display

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Subscription Invoice Tax

For recurring subscription invoices:

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Automatic Tax Application

  • Tax is calculated based on the subscription product’s settings
  • Customer exemption status is checked each billing cycle
  • Tax rates can be updated and will apply to future invoices

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Subscription Amount Changes

If you change a subscription’s tax settings:
  • Past invoices remain unchanged
  • Future invoices use the new settings
  • Proration calculations include tax

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Common Tax Scenarios

Settings:
  • Customer: Dutch individual, not tax exempt
  • Product: Standard rate (21%)
Result: Invoice shows full 21% BTW, customer pays total including tax.
Settings:
  • Customer: Dutch business, not tax exempt
  • Product: Standard rate (21%)
Result: Same as B2C - 21% BTW charged. Customer reclaims on their VAT return.
Settings:
  • Customer: German business, marked tax exempt
  • Customer VAT number stored: DE123456789
Result: Invoice shows 0% VAT, “BTW Verlegd” notice, customer accounts for VAT in Germany.
Settings:
  • Customer: US company, marked tax exempt
  • Delivery: Outside EU
Result: Invoice shows 0% VAT, marked as export sale.
Settings:
  • Line 1: Software (21%)
  • Line 2: Training manual/book (9%)
Result: Tax breakdown shows amounts per rate, totals calculated correctly.

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Troubleshooting

Check:
  1. Is your business registered for VAT in Settings?
  2. Does the product have a tax rate set?
  3. Is the customer marked as tax exempt?
If VAT registration is disabled, no tax will be applied.
Possible causes:
  1. Product has a different rate than expected
  2. Invoice item was manually adjusted
  3. Business default rate changed after invoice was created
Solution: Edit the invoice item and select the correct tax rate.
Check:
  1. Was the customer marked exempt before the invoice was created?
  2. Was the invoice created from an older order?
Solution: Edit the invoice and set tax rates to 0%, or recreate the invoice.
This usually happens with tax-included pricing. The calculation extracts tax from the total, which can result in rounding differences.Example: €10.00 at 21% = €8.26 net + €1.74 tax (rounds correctly)PayRequest handles rounding to 2 decimal places.

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Tax Reporting

PayRequest provides tax data for your bookkeeping:

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Available Reports

  • Transaction Reports: Show tax amounts per transaction
  • Invoice Export: CSV export with tax breakdown
  • Revenue Tracking: Separates net revenue from tax collected

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Bookkeeping Integration

Export your invoice data including:
  • Invoice number and date
  • Net amounts
  • Tax amounts by rate
  • Gross totals
  • Customer information
This data integrates with common Dutch bookkeeping software.

Tax & VAT Guide

Complete guide to tax settings in PayRequest

Tax Exemptions

Managing customer tax exemption status

Creating Products

Configure product pricing and tax settings

Invoice Templates

Customize your invoice appearance
This documentation explains PayRequest’s tax features. For advice on which tax rates to apply or how to handle specific tax situations, consult with a qualified tax professional familiar with Dutch and EU VAT regulations.