This article explains how clients can add a Value Added Tax (VAT) to invoices.
Value Added Tax (VAT) is an indirect tax that applies to the supply of goods and services.
More about VAT can be learned in our blog.
Only clients can make VAT adjustments to an invoice, not contractors.
How to Add a VAT Percentage to an Invoice
✅ Step 1 -Select the contractor
From the homepage, click the People icon followed by the All People tab. Select the contractor.
✅ Step 2 - Click the option Payments, expenses & work submission
✅ Step 3 - Select Add VAT
Enter the VAT percentage (%) and add any additional details if needed.
When VAT is added here, it is automatically marked as recurring and will be applied to the first invoice in the current cycle, as well as future billing cycles.
If VAT should only apply once, clients can remove it in the next cycle or add it as a one-time adjustment instead.
✅ Step 4 - Click Adjust Amount
The VAT percentage is automatically calculated based on the total invoice amount. If a bonus or other adjustments are added, the VAT total will be recalculated accordingly.
If the client finalizes and pays an invoice and then adds new line items later in the same billing cycle, those items will generate a new invoice. The VAT percentage will also be applied to this new invoice automatically, since VAT is recurring.
On this new invoice, clients can remove, edit, or update the VAT percentage if needed.