Tax Configuration

From WHMCS Documentation

For this feature in WHMCS 7.6 and earlier, click here.

WHMCS can gather necessary taxes when you make sales.

You can access this feature at Configuration () > System Settings > Tax Configuration or, prior to WHMCS 8.0, Setup > Payments > Tax Configuration.

Enabling Tax Support

In order to charge tax:

  1. Enable Tax Support.
  2. Click Save Changes.
  3. Set the desired settings below.
  4. Click Save Changes again.

General Tax Settings

Tax/VAT ID Number

Enter your company Tax/VAT ID in this field. Invoices will display this under the company address in the client area and on PDF printable invoices.

Inclusive/Exclusive Tax

By default, tax is exclusive. You need to add tax onto the prices you enter in WHMCS at the rate you entered. The alternative is inclusive tax, in which the prices you enter in WHMCS already include tax. For inclusive tax, WHMCS needs to work backwards to calculate the amount of tax to charge based on the rates you've set.

  • Exclusive Tax > Tax Amount = Item Price x ( Tax Rate / 100 )
  • Inclusive Tax > Tax Amount = ( Item Price / ( 100 + Tax Rate ) ) x Tax Rate

Custom Invoice Numbering

Custom Invoice Number is part of the EU VAT Addon.

To enable Custom Invoice Numbering, toggle the appropriate switch on Tax Configuration and click Save Changes. After you enable it, the configured custom invoice numbering will apply to invoices that you generate from then on.

Custom Invoice Numbering Format

This is the format of the custom invoice number to apply to the invoices WHMCS generates. The default value of this is {NUMBER}, which will contain only the value from Next Invoice Number. The field can contain any text in the invoice number that the client will see. You can add more tags to the field, which the system will replace when it generates the invoice.

Available tags are:

  • {NUMBER} — The value for Next Invoice Number.
  • {YEAR} — The four-digit year value for the current date.
  • {MONTH} — The two-digit month value for the current date.
  • {DAY} — The two-digit day value for the current date.

Next Invoice Number

The number that the system will assign to the next invoice it generates.

Only fill in this field if you want to change the number of the next invoice. Only increase this number; do not decrease it.

Auto Reset Numbering

This allows you to automatically reset the invoice number periodically. The automatic invoice numbering reset occurs when the automation cron runs on the last day of the month or year. If you want to use this feature, we recommend that you configure the cron job to run late at night in Configuration () > System Settings > Automation Settings or, prior to WHMCS 8.0, Setup > Automation Settings.

VAT Settings

VAT Mode

Toggle VAT Mode to ON. This will automatically display a window allowing you to set your VAT label display name. Enter one and then click Create Rules.

Auto Configure VAT Tax Rules

If you accidentally delete a rule or need to recreate or change the name of a rule, click here. Follow the prompts, using the appropriate VAT Rate for each EU country.

Custom Field Migration

If a WHMCS installation previously used the EU VAT Addon and a custom field to contain the client VAT Number, this option will display to perform a migration of the tax numbers from the custom field to store them in the client table.

VAT Number Validation

Toggle this to ON to enable validation of VAT numbers during registration and checkout. WHMCS uses VIES to validate EU VAT numbers and HMRC to validate UK VAT numbers.

Auto Tax Exempt

Check this to set clients as tax exempt when their VAT number successfully validates.

When you save a client's profile, WHMCS will revalidate their VAT number with the relevant authority (VIES for EU VAT numbers and HMRC for UK VAT numbers). If the VAT number is invalid, the client will lose their tax exempt status, and the system will apply tax to all newly-generated invoices accordingly.

Your Home Country

Select the country for your main business location.

Home Country Exclusion

Check this to always charge VAT if the customer's billing address is in the country you selected above.

Proforma Invoicing/Sequential Paid Invoice Numbering

Toggle this to ON to enable the invoice numbering format you set below.

Sequential Invoice Number Format

Enter a format for invoice numbering. You can include these tags, which will be replaced with the corresponding information when the invoice is generated:

  • {YEAR} — The current year.
  • {MONTH} — The current month.
  • {DAY} — The current day.
  • {NUMBER} — The sequential invoice number.

Next Paid Invoice Number

Enter a number to use to number the next invoice that WHMCS generates.

Auto Reset Numbering

Select the frequency with which WHMCS should automatically reset invoice numbering. Select Never if you do not want to automatically reset numbering.

Set Invoice Date on Payment

Check this to set the invoice date to the current date when payment is applied.

Tax Rules

You must configure tax rules in order to automatically charge tax in the cart. You can view and add tax rules in the Tax Rules tab.

Adding a Rule

To add a rule:

  • For Name, enter a name for the tax zone, which allows you to identify it.
  • For Country, choose whether this tax rate applies to all countries or only applies to a selected country.
  • For the state, choose whether it applies to all states in the selected country or only a selected state.
  • Finally, enter the tax rate as a percentage (for example, 17.5).
  • Click Add Rule. The system will create the tax rule and automatically add it to the appropriate table for Level 1 or Level 2 rules.

For example, a UK business would set up the system to charge VAT. In the country field, you would choose United Kingdom and for the state you would choose Apply Rule to All States. You would then enter the tax rate of 20.0 and click Add Rule. You can set up an unlimited number of tax rules.

Changing Tax Rates

Sales tax rates generally change over time. To change a tax rate in WHMCS, delete the existing rule and then create a new rule using the new rate and exactly the same name, country, and state.

For more information, see Changing Tax Rates.

Supported Values

WHMCS 8.0 and later supports tax rates with up to three decimal places and currency values up to 99 trillion.

Tax Rates

Prior to WHMCS 8.0, WHMCS only supported tax rates with up to two decimal places.

Advanced Rules

Setting Taxed Items

The flexible tax system in WHMCS allows you to set, individually, which items apply for tax. WHMCS sets products as untaxed by default. Even if you have tax rules set up, the system won't charge tax for it. This allows you to, for example, charge tax on the products you offer but not on services.

Setting a Product/Service as Taxable

To do this:

  1. Go to Configuration () > System Settings > Products/Services or, prior to WHMCS 8.0, Setup > Products/Services > Products/Services.
  2. Click the edit icon next to the product you wish to set to be taxable.
  3. Check the checkbox next to the item labelled Tax Product.
  4. Save your changes to the product.

Setting Domains as Taxable

You can set whether to apply taxes to domains.

Setting Billable Items as Taxable

You can set whether to apply tax to billable items.

Setting Late Fees as Taxable

You can set whether to apply tax to late fees on invoices.

Setting Custom Invoices as Taxable

You can set whether to apply tax to custom (manually created) invoices.

Compound Tax

The system calculates compound tax after and on top of a primary tax. If you need to add the Level 2 tax to the Level 1 tax, toggle this option on the advanced tab.

Deduct Tax Amount

If the Tax Type is Inclusive and the client's country and state or province selections result in them not meeting any of the configured tax rules, deduct an amount from the order. Base this on the total amount for taxable items on the order and the percentage of tax that would apply to the default country in the Localisation tab at Configuration () > System Settings > General Settings or, prior to WHMCS 8.0, Setup > General Settings. It will deduct the percentage that applies to the first applicable Level 1 and Level 2 tax rules.

Tax Calculation Mode

The Calculation Mode setting determines how the system calculates taxes.

Tax calculation method.png

There are two possible values for this setting:

  • Calculate individually per line item — Selecting this option will calculate taxes on a per line item basis. When you select this, the system will calculate tax for each line item, rounded to 2 decimal places. It will also calculate the total tax using the sum of the tax calculation for each individual line item.
  • Calculate based on collective sum of the taxable line items — Selecting this option will calculate taxes using the sum of the taxable line items on an invoice. When you select this, the system totals the individual taxable line items and calculates tax based on the sum total of those taxable line items.

Tax Amount Differences

Due to rounding for tax calculation modes and the calculation amounts, the resulting tax amounts may differ.

Calculate Individually per Line Item

Example tax calculation for 11 line items at $2.21 each:

Calculate Based on the Collective Sum of the Taxable Line Items

Example tax calculation for 11 line items at $2.21 each: