Tax Conformity

Tax Conformity ensures that every billable item is taxed correctly. This chapter covers tax calculation with rules, tax categories and exemptions, connectable external tax providers, and VAT ID validation.

Tax requirements differ by country, region, customer type, and product — and they change over time. instellix combines a configurable tax engine, optional external tax providers, and automated VAT ID validation so your invoices carry the correct tax wherever you do business.

Tax Conformity has three areas:

• Taxation — how the instellix tax engine calculates taxes per line item using tax rules, tax categories, and tax exemptions. Time-versioned rule variants let you prepare legal rate changes in advance.
• Tax Provider — which engine calculates tax. By default, the instellix tax engine applies your configured rules. Where you need an external engine — for example for the United States — you can assign Avalara AvaTax per country, optionally narrowed to a billing group.
• VAT ID Validation — automatic validation of European VAT identification numbers during invoice creation against the official VIES interface. The result influences which tax rule applies and is stored with the invoice for audit purposes.

VAT categories and tax exemptions also support e-invoicing documentation (why a reduced or zero rate applies). See VAT Categories and Tax Exemptions for details, and E-Invoicing for the electronic invoicing process.

Together, these capabilities give you one place to configure, calculate, and document taxes: the rules, the engine, and the VAT ID check that prove invoices were issued on a correct basis.