Does the rounding of VAT rates on your invoices to guests or on the Z-report seem strange to you? Well, no worries, the VAT is definitely being calculated correctly!
Now, let's dive into how it's calculated:
In orderbird MINI, the VAT is calculated for each item, and at the end of an invoice, all the calculated VAT rates are added up.
Compared to an invoice where items with the same VAT rate are first added up, and then the VAT is calculated based on the total, there may be some differences in rounding. Here’s an example to show you the difference:
A Calculation Example
Here’s the invoice you issued:
| Item | Price | |
|---|---|---|
| 1x pen set at €7 | €7.00 | B |
| 2 x books at €5.50 each | €11.00 | B |
| 2 x books at €4.20 each | €8.40 | B |
| 1 x booklet at €4 | €4.00 | B |
| Total | €30.40 | |
| B = 19% | Gross | €30.40 |
| Net | €25.54 | |
| VAT | €4.86 |
VAT Calculation: Per Item vs. Across Multiple Items
| Item | Price | Category | VAT Calculation per Item | VAT Calculation via Summed Items |
|---|---|---|---|---|
| 1x pen set at €7 | €7.00 | B | €7 /119*19 = €1.12 | |
| 2 x books at €5.50 each | €11.00 | B | (€5.50 /119*19) * 2 = €1.76 | |
| 2 x books at €4.20 each | €8.40 | B | (€4.20 /119*19) * 2 = €1.34 | |
| 1 x booklet at €4 | €4.00 | B | €4 /119*19 = €0.64 | |
| Total | €30.40 | €1.12 + €1.76 + €1.34 + €0.64 = €4.86 | €30.40 /119*19 = €4.85 |
Rounding Differences in the Cent Range Are OK
In this example, you can see that the two calculation methods lead to slightly different rounding results. Which one is correct?
Both results are correct! Your tax advisor and the tax authorities know that minor rounding differences can happen when calculating cent amounts because, mathematically, the results have more decimal places. The issue arises from the difference between mathematical precision and the way currency works, which only allows two decimal places for cents.
For example, if we had an item priced at 1 cent, the VAT would be zero because 1 cent cannot be divided further in the currency system:
- (0.01/119)*19 = 0.001596
- This corresponds to €0.00 in VAT, since €0.001596 cannot be represented in the currency system.
Of course, you can see the actual amounts that go to the tax office through your orderbird MINI. That’s why the "summed items" method or the "reverse calculation" might lead to small differences.