B2b reverse vat

When selling to businesses it is common to charge a 0% reverse tax on your products and services if your customers are located outside of the country you are originated. Those businesses are then required to handle their own VAT submission and payment in their own country.

B2B 0% reverse VAT taxation can be set up by using additional settings when creating a Tax Rate.

Create a B2B 0% Reverse Tax Rate

Steps

1. In your Firmhouse project, go to Taxes & Invoices in the sidebar

2. Click Create new tax rate

3. Under Rate, enter the tax percentage and set the tax type to Exclusive

4. Then select from the B2B origin country dropdown the country you are based in and/or want to treat as origin. The dropdown will only show countries you’ve enabled for your project under Settings > Subscription model in your Firmhouse project.

5. Click Save

Now set this tax rate as the default for your project and make sure all your appropriate plans and products are also set to use this tax rate. See the article about managing tax rates to learn how to do this.

Sample Checkout with B2B 0% Reverse Tax in Action

The following example demonstrates how B2B reverse VAT works in practice:

• When the customer’s country is set to the Netherlands (the country set as B2B origin country in the Tax Rate), taxes are applied normally
• When a customer signs up from Belgium (outside the origin country), no taxes are applied and the reverse charge mechanism takes effect