Vertex Advantage and Vertex Advantage Plus
Vertex Advantage automates online VAT, GST and US sales tax calculations in real-time. Applying accurate customer location determination and taxability rules across multiple countries and regions at point of sale, Vertex Advantage provides in-depth reports which you can use to remit your own taxes where you have a tax obligation.
This service offers the following benefits to your business:
- One simple integration future-proofs tax management needs now and as you expand into new regions
- Minimize risk in keeping up to date with rapidly evolving international VAT/GST and US sales tax rules
- Produce tax reports for multiple tax authorities quickly and easily
- Know when you are approaching tax thresholds in new regions and need to register for tax
- Streamline business to business validation for reverse charge and US tax exemption certificate customers
- Be confident sales invoices are compliant across multiple tax rules, from the simplest to the most complex for example Taiwan eGUI.
The following sections outline the main features of the service.
Customer Location Determination
Countries have different requirements on how to determine whether a transaction should fall under local tax laws or not. The key point to consider is where the customer of the electronic service is located, or in some cases, where they are typically located.
Some countries require the collection of two pieces of non-conflicting evidence while others only require one. Vertex has developed a real-time tax logic algorithm and evidence hierarchy that manages the effective allocation of the correct tax treatment for every transaction.
The country of the customer must be determined by several pieces of evidence. The types of evidence that Vertex uses can include the following:
- IP address
- Billing address (including the region and the ZIP code)
- Payment country (can be derived from the credit card BIN)
- Payment method country (PayPal user country) and IBAN country
- VAT/GST registration numbers
- Other commercially relevant information
Business-to-Business (B2B) Transactions and Tax ID Validation
Where there is a sale to a business customer, the sale may be exempt from tax. This is known as a Business-to-Business (B2B) transaction. For example, where there is a sale for resale to a business customer the sale may be exempt from sales tax. Vertex supports this kind of transaction. In addition, a tax ID validation service is provided that you can use to verify your customers' tax IDs.
When tax is not charged to a business customer, such customers will apply what is called reverse charge. To ensure that a transaction qualifies as a reverse charge, the business customer must typically provide a tax ID number issued by their local tax authority to confirm that they are registered for tax. This number is validated using the service's API.
Depending on the country, the service will either validate the number against a local database or check the syntax of the number that is provided, as directed by local requirements.
For some countries, there is an additional requirement of having a self-declaration message that states something similar to: “By inputting your VAT/GST number you confirm that you are a VAT/GST registered customer and you will account for VAT/GST.”
For certain countries, where VAT/GST is charged on B2B transactions, there is also the option to request that the VAT/GST number is displayed on the invoice. The message will be similar to: “Please add your VAT number so it displays on the invoice.”
For more information, see Vertex Validator.
Tax Inclusive and Exclusive Pricing
The service provides a pricing option to display pricing with or without tax, these options are called universal (tax inclusive) and dynamic pricing (tax exclusive).
With Universal pricing, the merchant can keep the price of their digital goods the same across all countries and include the tax in the price. In this case, the tax inclusive amount can be sent using the total_amount field in the API. The service will calculate the tax and return the tax exclusive amount (
amount field), amount of tax (
tax_amount field), and the tax inclusive amount (
The default behavior for B2B transactions is different from Business-to-Customer (B2C). When universal pricing is enabled, the B2B transaction will recalculate the
total_amountfield to remove the amount of tax that would have been charged if the transaction had been B2C. This behavior can be overridden via an account setting, if preferred, so that B2B transactions can also have Universal pricing.
Dynamic pricing is where the merchant can price per individual country. They are adding the tax amount to their list price. Where the pricing is dynamic, the amount is sent to Vertex and the
tax_amount is added to this to give the
Subscription Lifecycle Management
For recurring transactions, a placeholder transaction can be created in the service. This provides the evidence to determine the customer's country so the VAT/GST and the US sales tax rate can be determined for the initial and subsequent transactions. When subsequent transactions occur, the placeholder transaction ID can be provided to Vertex so that the evidence from the initial transaction is used.
If the subscription is updated and there is a change of evidence, for example customer country/VAT number has changed, this information needs to be provided to Vertex to update the tax calculation.
If there are upgrades or downgrades, Vertex needs to be notified of the revised charge amount where applicable. These changes are then reflected in appropriate filings and tax reports.
The service allows you to take advantage of the in-built invoicing features.
The service's invoicing module is an optional feature that meets compliance regulations in all countries that we support. For example, India and Belarus require a digital signature to be displayed on every invoice, and in Saudi Arabia the invoice to the end customer must be in Arabic.
For more information, see Vertex Invoicing IQ Overview.
Vertex Advantage Plus
Vertex Advantage Plus streamlines international compliance for VAT and GST, delivering an end-to-end solution from registration to filing and remitting the tax. For more information, contact support.
Updated 9 months ago