Plans supporting this feature: Starter Growth Scale
With our Tax Management functionality you can set up Frisbii to automatically determine the value-added tax (VAT) rate to be applied for a purchase based on the country of your customers.
With this you can easily sell you products across Europe while we take care of applying the taxation logic for you.
This functionality enables you to manage different business models with different tax rates in one Frisbii account.
Note
While our Tax Management functionality is powerful, if you do not want to use it, Frisbii will continue to work as it used to with the flat % VAT rates you have configured.
Tax setting configuration
Tax settings are managed under Configurations → Finance and accounting → Tax Management
Tax settings consist of a list of countries and VAT rates to be applied for this country.
With each Frisbii account we provide a standard tax setting that contains the standard VAT rate for the 20 most important European countries.
Warning
Frisbii does not guarantee these tax rates are up-to-date nor that they apply for your business.
Please carefully review the tax rates and change them accordingly with your tax advisor or finance team.
You can edit existing tax settings by adding new countries, removing or changing existing countries and their tax rates. Entire tax settings can also be deleted.
Each tax setting a an entry “Remaining countries”, which is applied if the concrete country of your customer is not configured. This entry cannot be removed.
If you have different products for which different tax rates apply you can create multiple Tax settings to cater for these different requirements.
Using Tax for invoice creation and products
While you can set up multiple Tax settings, only one can be classified as the default setting.
When you create an invoice or a new product, Frisbii will suggest the default Tax setting to be used.
This can be changed to either another Tax setting or a flat VAT % rate.
Existing products can be changed from a flat VAT % rate to instead use a Tax setting.
How Frisbii applies tax rates
When a product or invoice line item references a Tax setting, Frisbii will determine the tax to be applied by checking the country of the customer at hand and looking up the applicable VAT rate in the Tax setting.
Example:
A customer with country Germany is buying a subscription that references the standard Tax setting. 19% tax is applied for that subscription based on the configuration.
The customer's address on the customer record is the customer's billing address. In addition, you can store an optional shipping address on the customer record. All invoices, including scheduled subscription invoices, are populated automatically with these addresses. On manually created invoices, you can override the billing and shipping address for that invoice only.
If a shipping address exists, it takes precedence over the billing address when the tax country is determined.
In explicit the priority followed is:
Shipping address country
Billing address country (the customer's country)
Example:
A customer's billing address is in Germany and their shipping address is in the Netherlands.
In this case, the tax rate for the Netherlands will be applied.
Special case: The customer and invoices does not have any country configured
Note
If a customer has no country configured, Frisbii will apply the account’s default VAT percentage, which is configured under Configurations > Admin and billing > Account settings. This setting serves as a global fallback.
Reverse Charge
The reverse charge mechanism shifts the responsibility for reporting VAT (Value Added Tax) from the seller to the buyer. Instead of the seller charging VAT on a transaction and remitting it to the tax authorities, the buyer records and pays the VAT directly. This process is commonly used in cross-border transactions or specific industries to combat tax fraud and simplify tax compliance.
As our user, you can apply Reverse Charge for your customers in other EU countries.
When exactly is the Reverse Charge applied?
There are three minimum conditions that need to be met for the Reverse Charge to be applied on the invoice or the credit note:
The Country of the Customer and Country of your account should be different EU countries
The Customer must have a VAT ID configured
The Plan, Add-On and Usage-based billing product that are part of the subscription must have a Tax Policy where Reverse Charge is enabled
Note
Switzerland, Norway, Iceland, and the United Kingdom are not treated as EU countries. For customers in these countries, the VAT exemption for non-EU countries applies instead of reverse charge.
How to enable Reverse Charge on the Tax Policy?
The Reverse Charge functionality has to be configured at a Tax Policy level so that it can be applied on your Plans, Add-ons and Usage-based billing products
Navigate to Configurations → Finance and accounting → Tax management.
Select an existing Tax Policy or create a new Tax Policy.
Click the checkbox for Reverse charge.
You can define a country-specific invoice text which overrides the default text from Invoice and credit notes settings.
Important
The texts for reverse charge, third country, and Organschaft are not fixed. Each field is prefilled with a generic placeholder text. Replace it with the wording your local regulations require and confirm it with your tax advisor.
Important
If you are using the Translations functionality to communicate with your customers in the language of their choice and you have enabled different languages for communication, then the Invoices and Credit notes will be created in the language set on customer record. You can translate each VAT exemption text, so it's printed in the customer's language.
VAT exemption for non-EU countries
For supplies to customers outside the EU, you can apply a VAT exemption. Invoices and credit notes to these customers are then issued with 0% VAT and an exemption text that explains why no VAT is charged. Switzerland, Norway, Iceland, and the United Kingdom are treated as non-EU countries.
Like reverse charge, the VAT exemption is configured per country in your tax setting, so it applies to all Plans, Add-ons, and Usage-based billing products that use this tax setting.
How to enable the VAT exemption for non-EU countries
Navigate to Configurations → Finance and accounting → Tax management.
Select an existing tax setting or create a new one.
In the Country VAT override section, click Add country and select the non-EU country, for example Switzerland. The country is listed in the NON-EU group.
Enter the Tax rate for the country.
Click the checkbox for VAT exemption. When enabled, VAT exemption rules apply to invoices for customers in this country.
Optional: Enter a country-specific text in the Invoice text override field. This text replaces the default VAT exemption text on invoices and credit notes for this country.
Use this tax setting for all the Plans, Add-ons, and Usage-based billing products where you want to apply the VAT exemption.
Note
If you leave the Invoice text override field empty, the default invoice text "Outside the scope of VAT." is printed. The default text can't be changed in the Invoice and credit notes settings; use the override field to set your own wording per country.
What scenarios are we supporting?
Frisbii Billing determines which case applies by comparing your account country with the customer's country. VAT is 0% in each of the first three cases; only the printed text differs.
Reverse charge (EU countries):
If an invoice or credit note is issued to a Danish business customer by a German merchant, your reverse charge text appears on the PDF.
VAT exemption (non-EU countries, including Switzerland, Norway, Iceland, and the United Kingdom):
If an invoice or credit note is issued to a UK or Swiss customer by a German merchant and VAT exemption is enabled for that country, your VAT exemption text appears on the PDF (default: "Outside the scope of VAT.").
Organschaft (domestic related companies):
If an invoice or credit note is issued by a German merchant to a German customer marked as Customer is related to merchant (Organschaft), your Organschaft text appears on the PDF. The Organschaft flag takes precedence over the country-based determination.
For all other sales (B2B domestic without Organschaft + B2C) there will not be any additional sentence on the invoice / credit note PDF.
Organschaft (intercompany)
If you invoice a related company within your VAT group (Organschaft / fiscal unity), both parties are usually located in the same country, so the country comparison alone can't identify the case. To handle it, select Customer is related to merchant (Organschaft) on the customer record. Invoices to this customer are then issued with 0% VAT and your Organschaft exemption text.
Limitations
Organschaft only applies to domestic customers, meaning customers located in the same country as your account. For cross-border customers, the reverse charge or non-EU VAT exemption rules apply.
Frisbii Billing doesn't verify whether an Organschaft legally exists. Setting the flag is your declaration; confirm it with your tax advisor.
On Demand Order Lines in Invoices and Credit Notes
In case of On Demand Order lines on Invoices and Credit Notes, the Frisbii Billing checks for the Shipping Address, followed by the Billing Address (if Shipping Address doesn't exist) to apply the Reverse Charge Rule.
Sample PDF Invoices
Sample 1
Sample 2
