In general there are different methods that can be used when calculating taxes.

The first is the "horizontal" approach, where each item is taxed individually and net, tax, and gross values on the document are the sum of all items.

The second is the "vertical" approach, where the tax isn't calculated on the item level. In this case, the net values are summed up (by tax rate) and then the tax is applied on the sum.

instellix uses the horizontal method.

Which tax rule applies?

When several tax rules match the same case, the most specific rule wins. Specificity follows a fixed order:

1. Customer type (e.g. B2B/B2C)
2. VAT-ID-required
3. Purchase item type
4. Region

A rule matching the customer type outweighs a rule that only matches the region.

Rates are flat per item — progressive rates are not supported. Tax rules support time-versioned variants, so a rate change can be scheduled as of a given date — see Tax Rules.