Maybe you noticed some discrepancies on your issued invoice when reviewing the VAT. Let's look at what happens and why.
The core question
You noticed that sometimes the VAT on invoices differs by 0,01 cent. This might be caused by the way the VAT can be calculated and when the rounding to 2 decimal places is applied. Why does this happen?
Calculation per line:
This way of calculation adds VAT to each line on the invoice and then sums up the price, including the VAT of the individual item, to make the final total amount. The rounding is happening for each line on the invoice.
Total amount calculation:
This calculation sums up the prices of each item without the VAT and then multiplies it by the VAT rate. Once the VAT is calculated, it is added to the total price without the VAT, making the final total amount. The rounding is applied to the total amount.
The OnSinch calculation
OnSinch calculates VAT on invoices based on the total amount excluding VAT, as this reduces the risk of rounding errors, ensures better alignment with VAT legislations, and results in clearer final invoices that are easier to audit.