> ## Documentation Index
> Fetch the complete documentation index at: https://alguna.com/docs/llms.txt
> Use this file to discover all available pages before exploring further.
# Tax Management Overview
> Configure tax calculation and compliance for your invoices
# Tax Management
Alguna provides comprehensive tax management to ensure your invoices are compliant with local and international tax regulations. Configure tax rates, handle multiple jurisdictions, and automate tax calculations.
***
## Tax Calculation Methods
### Alguna Tax
Built-in tax calculation based on configurable rules:
* Configure tax rates by region
* Automatic tax determination based on customer location
* Support for multiple tax types (VAT, GST, sales tax)
### Third-Party Tax Providers
Integrate with specialized tax services for automatic calculation:
* **Stripe Tax** - Automatic tax calculation
* **Avalara** - Enterprise tax compliance
* **TaxJar** - Sales tax automation
***
## Setting Up Tax Rules
### Creating a Tax Rule
1. Navigate to **Settings → Tax → Tax Rules**
2. Click **Create Rule**
3. Configure the rule:
* **Name**: Descriptive name (e.g., "US Sales Tax - California")
* **Tax Rate**: Percentage (e.g., 7.25%)
* **Tax Type**: Sales tax, VAT, or GST
* **Conditions**: When this rule applies
4. Click **Save**
### Rule Conditions
| Condition | Description |
| -------------------- | --------------------------- |
| **Customer Country** | Customer's country code |
| **Customer State** | State/province |
| **Customer City** | City (for local taxes) |
| **Has Tax ID** | Customer has a valid tax ID |
| **Product Category** | Product tax category |
| **Seller Country** | Your business country |
### Combining Conditions
* Use AND logic: All conditions must match (e.g., country is US AND state is CA)
* Use OR logic: Any condition can match (create multiple rules with same result)
***
## Tax Types
### Value Added Tax (VAT)
Common in Europe and many other countries:
1. Navigate to **Settings → Tax → Tax Rules**
2. Create rule with **Tax Type** = VAT
3. Set rate (e.g., 19% for Germany)
4. Set conditions for when it applies
### Sales Tax
Common in the United States:
1. Navigate to **Settings → Tax → Tax Rules**
2. Create rule with **Tax Type** = Sales Tax
3. Set rate based on jurisdiction
4. Configure state-specific conditions
### Goods and Services Tax (GST)
Common in Australia, India, Canada:
1. Navigate to **Settings → Tax → Tax Rules**
2. Create rule with **Tax Type** = GST
3. Set applicable rate
4. Configure country conditions
***
## Tax Treatments
### Standard (Tax Charged)
Normal taxation where tax is calculated and added to invoices.
### Exempt
No tax charged when customer is tax exempt:
1. Navigate to **Customers → \[Customer]**
2. Edit tax settings
3. Enable **Tax Exempt**
4. Enter exemption reason
5. Upload exemption certificate (if required)
### Reverse Charge
For B2B transactions where customer handles tax (common in EU):
1. Create a tax rule with 0% rate
2. Set **Tax Treatment** = Reverse Charge
3. Configure conditions (customer has valid EU VAT ID, different country than seller)
4. Add invoice note about reverse charge
### Zero-Rated
Tax rate is 0% but transaction is still technically taxable (e.g., exports):
1. Create rule with 0% rate
2. Set **Tax Treatment** = Zero-Rated
3. Add reason (e.g., "Export outside EU")
***
## Customer Tax Settings
### Tax ID Collection
For each customer:
1. Navigate to **Customers → \[Customer]**
2. Edit customer profile
3. Enter **Tax ID** (VAT number, EIN, etc.)
4. Enable **Validate Tax ID** for automatic validation
### Tax Exemption
Mark a customer as tax exempt:
1. Navigate to **Customers → \[Customer]**
2. Edit tax settings
3. Toggle **Tax Exempt** on
4. Enter exemption reason
5. Add exemption certificate reference
### Tax ID Validation
Alguna can validate EU VAT numbers automatically:
1. Enter customer's VAT number
2. System validates against EU VIES database
3. Invalid numbers are flagged for review
***
## How Tax Is Calculated
When an invoice is created:
1. **Location determined** - Customer's country, state, city
2. **Exemptions checked** - Is customer tax exempt?
3. **Rules matched** - Find applicable tax rules
4. **Rate applied** - Calculate tax amount
5. **Line item added** - Tax appears on invoice
***
## Multi-Jurisdiction Setup
### Legal Entities
For businesses operating in multiple countries:
1. Navigate to **Settings → Legal Entities**
2. Create a legal entity for each jurisdiction
3. Set country and tax ID for each entity
4. Assign tax rules to each entity
### Tax Rules per Entity
Each legal entity can have different tax rules. For example:
* US entity with state-by-state sales tax
* German entity with EU VAT rules
***
## VAT Reverse Charge (EU)
For B2B transactions within the EU:
### Automatic Detection
When enabled, Alguna automatically applies reverse charge when:
* Customer is in the EU
* Customer has a valid VAT ID
* Customer is in a different country than seller
### Invoice Display
When reverse charge applies, invoices show:
* 0% VAT with "Reverse Charge" note
* Required legal text about VAT liability
***
## Tax Reports
### Viewing Tax Reports
1. Navigate to **Reports → Tax**
2. Select date range
3. Filter by country, tax type, or legal entity
4. View summary of tax collected
### Exporting for Filing
1. Navigate to **Reports → Tax**
2. Select the filing period (e.g., Q1 2024)
3. Choose jurisdiction
4. Click **Export** to download CSV for filing
***
## Common Configurations
### US Multi-State Sales Tax
Create rules for each state where you have nexus:
* California: 7.25%
* New York: 8.875%
* Texas: 6.25%
* Florida: 6.00%
### EU VAT
Create rules for each EU country with standard rates:
* Germany: 19%
* France: 20%
* Italy: 22%
* Spain: 21%
* Netherlands: 21%
***
## Best Practices
Always validate customer tax IDs for B2B transactions.
Tax rates change - review rules periodically.
Keep exemption certificates on file.
Work with tax advisors for complex scenarios.
***
## Next Steps
Configure built-in tax settings.
Enable Stripe Tax integration.