General information about taxes
Taxes play an important role in modern business, so the RO App system offers a convenient tool for setting up and applying them. Thanks to this, companies can automate tax calculation processes in accordance with the requirements of the law and the specifics of their activities.
If your company is a taxpayer, RO App has the ability to customize and apply tax rules to products and services in orders, sales, invoices, and postings.
When applying tax rates, RO App calculates the total amount of tax from each document and summarizes it in a table that you can view in the Tax calculation report.
Types of taxes
When creating taxes in the RO App system, you can choose the “Inclusive” or “Exclusive” type.
Please note: tax is calculated not on the total amount of positions in the work order, but for each unit separately.
Inclusive tax is a tax that is included in the cost of products. That is, when using this type of tax, you need to indicate the purchase price of the products including this tax during the posting procedure.
Example 1
For example, the embedded tax is 20%. Let's take a product worth €100 as an example. That is, the product costs €100 and already includes 20% tax. Since the product already includes tax, we calculate the tax amount:
Amount including tax = €100 / (100% + 20%) = €100 / 120% = €100 / 1.2 ≈ €83.33
Tax paid: €100 - €83.33 ≈ €16.67
This means that the tax paid is €16.67.
Example 2
To find the amount of tax paid (already included in the price) at a rate of 17% and a product price of 683 €, use the following formula:
683€ / (100% + 17%) =683€ / 117% = 683€ / 1.17 ≈ 583.76
Tax included: 683−583.76=99.24
Tax included at a rate of 17% on a product worth 683 ≈ 99.24
Formula for calculating the tax paid: Price including tax - (Price including tax / (1 + Tax rate/100)) = Amount excluding tax
Price including tax - Amount excluding tax = Amount of tax paid
Exclusive tax is a tax that is paid additionally and is calculated on the final cost of a good/service. When using this type of tax, the total amount of the order/sale will differ from the total amount of the items in this order/sale. Because the tax will be calculated on the final amount of the sale.
For example, the exclusive tax is 20%. Let's take an example of a product costing €100.
Exclusive tax: 100€ × 20% = 100€ × 0.2 = 20€.
Creating taxes
If your company is a taxpayer, it is convenient to create taxes in RO App and apply them in various documents. Learn more about creating taxes.
Groups of taxes
For convenience, you can combine taxes into groups. This is especially useful if different tax rates apply in different locations.
Application of taxes
Taxes can be applied to documents (orders, sales, invoices, postings).
In the General rules section, add a tax or a group of taxes.
Set the priority of taxes in the list.
Learn more about Application of taxes.
Editing and deleting
Tax rules can be edited or deleted. After making changes, the user can choose whether to recalculate taxes in existing documents.
Exceptions
RO App allows you to set up exceptions for the entire category or separately for a product or service. For example, you can make an exception for services if they are not subject to taxes. More details about tax exceptions.
Example of tax calculation
Let's consider an example of an order consisting of several items with an indication of quantity, cost, and applicable taxes. For some products, the cost includes a 17% tax, while for others, no tax is applicable. Below is a detailed list of products and a calculation of taxes for each item separately.
Formula for calculating embedded tax: Tax-free amount = Tax-inclusive price - (Tax-inclusive price / (1 + Tax rate/100))
Embedded tax amount = Tax-inclusive price - Tax-free amount
Order contents:
Charger — 2 units at €86 each (price includes 17% tax)
Protective glass — 1 unit, €25 (tax not applicable)
Phone case — 1 unit, €32 (price includes 17% tax)
1. Charger — 2 units at €86 each
Calculation and rounding are performed for each unit of the product separately, and the total values for the item are formed by multiplying by the quantity.
Calculation for 2 items
Amount with tax: 86 × 2 = 172
Amount without tax: 172 / 1.17 ≈ 147.00
Total tax: 12.50 × 2 = 25.00
2. Protective glass — 1 item, €25
Tax: not applicable
Amount with tax: €25
Amount without tax: €25
Tax: €0
3. Phone case — 1 item, €32
Tax rate: 17%
Calculation
Amount without tax:
32 / 1.17 ≈ 27.35
Tax included:
32 − 27.35 = 4.65
Tax on the case: ≈ 4.65
Total for all products:
Product | Amount with tax | Amount without tax | Tax |
Chargers (2 pcs) | 172.00 € | 147.00 € | 25.00 € |
Protective glass | 25.00 € | 25.00 € | 0 € |
Case | 32.00 € | 27.35 € | 4.65 € |
Total | 229.00 € | 199.35 € | 29.65 € |