Customer Portal

Home Submit a ticket My Tickets
Login  Sign up

Reverse sales tax

This guide describes how to configure the invoice application to automatically generate coding lines to handle reverse sales tax.


It varies between different financial systems how and if these have their own built-in functionality for handling reverse sales tax, always consult with the financial system consultant before setting up in the invoice application according to. below to prevent problems from occurring with e.g. double booking of tax in the accounts!

Reverse sales tax

Reversed sales tax means that it is the buyer and not the seller who must declare how much of the invoiced costs for services are subject to sales tax reporting to the Tax Agency. This is done by 25% of the invoice amount being reported as debit resp. credit amount on specific accounts for incoming/outgoing tax, which is then included as part of the tax report to the Tax Agency. 

In the invoice application, there is support for managing and automating this through a combination of tax codes and tax distribution which is connected to resp. tax code. For full automation, the tax codes must also be linked to the relevant vendors by entering a standard tax code on the vendor in the administration tool.

Creating a tax code with the associated posting of reversed sales tax is as follows:

1. Activate the parameter UseVATCode

 You find it under System configuration - System settings - Functions.

2. Create a tax code

  1. Open the administration tool
  2. Choose System configuration - Taxes and fees - Tax codes, click on New at the top of the page to open the form to register a new tax code.
  3. In the form, enter the name of the tax code in the field tax code - suggested "RT" and enter the description "Reverse tax" (check box "default" should NOT be selected).
  4. Save.

3. Create Tax distribution/coding that should be linked to the Tax code

  1. Choose System Configuration - Taxes and Fees - Tax Distribution and click the New button at the top of the page to open the form to register a new Tax distribution.
  2. In the form, enter Tax code "RT" to link the distribution to the correct Tax code.
  3. At/under the selection "Coding template for invoice without tax" - click on the New button to open the form to create the coding rows in the Tax distribution.
  4. In the form, enter the template name "Reverse Tax" and then create coding lines according to the following:
    NOTE! The accounts are only examples and may need to be adapted to the chart of accounts applied in each individual case.
    • Account: 2617 Percent: -25, Row type: Reverse Tax.
    • Account: 2647 Percent: 25, Row type: Reverse Tax.
    • If the UseFrequentAllocationProposal parameter is Yes, a cost line must also be specified on the coding template.
  5. Save and close, and save again in the underlying first form.

4. Connect tax to vendors

In order to have full automaticity in the invoice application creating coding suggestions for reverse tax automatically on imported vendor invoices, it is required that the now created Tax code acc. Steps 1 and 2 above are linked to vendors who may be relevant to send invoices that are subject to reverse charge.

  1. Choose Base Register - Vendors - Vendors.
  2. Find a vendor who invoices with reverse tax, and open the vendor.
  3. To the right of the Vendor Card there is a field for Tax code, select the tax code you created in point 2.
  4. Save.

When the above steps are completed, all invoices received from the current vendor which are subject to reverse tax (and thus lack tax amounts in the invoice header) will automatically have these two coding lines created on the invoice in connection with the invoice being imported.