Taxation is set up automatically in Rentman using the default VAT rates for your country. You can manually change the VAT rates or set different rates for a project. In this article we will explain how to:
- Change and apply VAT rates
- Set up VAT for customers in countries that employ different VAT rates.
- Change the VAT rate for your project or invoice
Taxation works differently for US accounts. If you are a US user, please see Taxation in US accounts.
VAT rates for your country are pre-configured according to your country’s rates. You can configure how (much) VAT is charged and add different rates using VAT classes and VAT schemes.
Every item/crew/transport function in Rentman is assigned a VAT class. Think of these as the "VAT groups" that the item should have.
For example, your items may be taxed at two different rates: "High rate" (e.g. equipment taxed at 23%) and "Low rate" (e.g. equipment taxed at 10%). VAT Classes are nothing more than names. Rates will only be assigned to these VAT classes when used within a VAT Scheme.
By default, most Rentman accounts are already set up with the following 3 VAT classes:
- High rate
- Low rate
- Zero rate (goods excluded from VAT)
To edit or create a new VAT class go to settings Configuration > VAT Classes
Once VAT classes have been named, VAT schemes can be created which link VAT classes to specific percentages. These VAT schemes can later be selected in the Financial tab of the project.
For example, by using the VAT scheme in the screenshot above, items in a project (screenshot below) that are assigned "High rate" will be charged 23% VAT, while the ones assigned "Low rate" will be charged 10%.
To edit or create a new VAT scheme go to settings Configuration > VAT schemes (under financial)
VAT Schemes have three options:
- Rates: These are the VAT classes that you've configured in Rentman (High, Low, Zero, etc.)
- Fixed rates: A single rate that will be applied to the entire project.
- VAT reverse charge: A 0% rate e.g. for a foreign customer.
Setting VAT Defaults
Setting up defaults will ensure that newly created equipment, functions, and contacts are all set up with the correct VAT class/scheme rate. By ensuring that your VAT rates are in order, this can be speed up the process of getting an accurate quote to the client.
To change default VAT schemes and classes go to the settings Configuration > Financial >Financial.
VAT class for equipment
VAT can vary per equipment item. For each item, you can configure what class should be used (high, low, or zero-rated in default).
- Navigate to the category Equipment module > double click on an equipment item to edit it.
- Scroll down to the "financial" section > select the VAT class you want to set for this item
Rentman Tip: In the overview of the category Equipment module or when editing functions, you can also add a column to see what VAT class a given item/function has. If one or more items need to have their class changed, you can do so by grouping on that column and bulk editing all items with the wrong class.
VAT scheme for contacts
If you have a client or a location from a country you can set a different VAT scheme for this contact. When creating projects and invoices for this contact, the VAT scheme you set for them will automatically be applied.
- Go to the contact_phone Contacts module > double click on the contact to edit the details
- Go to the Payment tab > Choose the preferred scheme
Updating VAT rates
New year, new VAT rates! Once VAT classes are in place and assigned to items/functions, updating rates is as easy as:
- Create a new VAT scheme (e.g. "VAT 2022")
- Set it up again as "Rates", and put in the percentages that each of my classes should have for the new year.
For example, let's say that the VAT on "Low rate" items will go up after Dec 31st. The percentages of the other classes can remain unchanged, "Low rate" will be changed to 15%.
- Change the Default VAT scheme in settings Configuration > Financial to the newly created scheme. This will ensure all new projects will have that VAT scheme applied by default. You can then change which scheme is used manually where needed, like for projects created before the new VAT scheme was created, but that need it applied.
But doesn't this leave old VAT schemes/classes in the Configuration module?
In terms of classes, it typically isn't necessary to set up new classes if the VAT rates changes from year to year, only when a new category of VAT is needed.
For example, if a group of rental items will need a new VAT rate applied to them that is different from that of all the VAT classes you already have.
With VAT schemes, we recommend adding new schemes each year (naming them accordingly), and keeping old schemes, in order to keep accurate records of how old projects were taxed. By naming them according to the year, and making sure to change the default VAT scheme, it should be easy to see which VAT schemes are for the current year and which are for past years.
Charging different VAT rates in your projects
You can charge a different VAT rate for a customer by changing the VAT scheme in your project or invoice.
For a complete project
- In an opened project, go to the Financial tab.
- Next to VAT in the summation, choose your desired scheme.
For an invoice
- Go to the monetization_on Financial module > Invoices Tab
- Add a new invoice or select an existing invoice and click edit.
- At the bottom of the "overview" section choose your scheme.
- Click (Re)generate to generate the invoice with applied VAT scheme.
- Click Save to apply your changes.
Taxation in US accounts
In US Rentman accounts you can only set up Tax schemes with a fixed rate. You can then assign a specific scheme to contacts, and choose which equipment is taxable and which is not.
Set up Tax scheme
Tax rates can vary on federal, state, and local levels. In the settings Configuration module, you can set up different Tax schemes with fixed rates.
Mark equipment as taxable
You can choose whether to tax or not each piece of equipment. Here's how:
- Add (or edit) equipment.
- In the Data tab, go to the "Financial" section.
- Choose between "Taxable" and "No tax" in the "Taxable" field.
You can also edit this information in bulk, and change this information in the Equipment tab of your projects.
Tax scheme for specific contacts
You can choose which rate to apply to each contact. Here's how:
- Add (or edit) a contact.
- Go to the Payment tab.
- In the "Payment information" section, select a Tax scheme in the "Tax rate" field.
When you add a contact as a client or a location to your project, Rentman will ask you if you want to apply this rate.
It is also possible to manually apply a different rate in your project.