Taxes

Taxes on Proper are calculated automatically according to the tax rate you set on a subscription. Thereby, tax is rounded per line on the invoice. In line with Danish accounting legislation, amounts are rounded to two decimal points.

Examples:

Line 1 (25% tax): 199,90 * 1,25 = 249,875, rounded to two decimal places = 249,88

Line 2 (19% tax): 199,90 * 1,19 = 237,881, rounded to two decimal places = 237,88

Tax rates

On Proper, you can create as many custom tax rates as you require for your invoices. All tax rates you define will be available for all your customers. When setting up a subscription, all you need is the right tax rate ID which is returned upon creation. With each tax rate, you define how it should be displayed on an invoice (displayName) and optionally some further internal explanation of when the rate should be used (description).

Each tax rate object also stores the tax mode. Select whether the rate should be Exclusive, Inclusive, Exempt, or ReverseCharge.

To create a tax rate, you can use the following API call:

curl --request POST \
--url https://api.properpayments.io/tax-rates \
--header 'Authorization: YOUR_TOKEN' \
--header 'Content-Type: application/json' \
--data '{
"displayName": "DK Tax",
"rate": 0.25,
"taxMode": "Exclusive",
"description": "Tax to use on Danish customers"
}'

Reverse charge

In some business transactions, the reverse charge mechanism may apply. This means that the buyer, rather than the seller, is responsible for accounting for the tax due. This often occurs in cross-border business-to-business (B2B) supply of services within the EU, making it easier for companies to sell to other European countries without registering for tax there.

When the tax mode is set to ReverseCharge, the rules for reverse charging of tax will be automatically applied. Consequently, the tax rate is displayed as 0%, and the invoice will include the mandatory information: "Tax is subject to reverse charge."