Configure taxes and EU VAT in WHMCS

WHMCS can calculate sales tax or VAT on invoices based on each client's country and state. For businesses in the EU, its VAT mode handles VAT number validation and the reverse charge for business customers. This guide explains the settings; always confirm the rules for your own country with an accountant.

Before you start

• Know where you must charge tax and at what rates.
• Your company's VAT or tax ID, which should appear on invoices (add it to Pay To Text in General Settings).

Enable tax

1. Go to Configuration → System Settings → Tax Configuration.
2. On the General Settings tab, tick Tax Support Enabled.
3. Choose Tax Type:
   • Exclusive – prices are shown without tax and tax is added at checkout (common for B2B).
   • Inclusive – prices already include tax (common for consumers in the EU).
4. Choose what is taxed by default: Domains, Late Fees, Custom Invoices.
5. Choose how compound and level 2 taxes apply if your country uses them (for example Canadian provinces).
6. Click Save Changes.

Add tax rules

1. Open the Tax Rules tab.
2. Under Add New Tax Rule, enter a Name (for example VAT), choose Country and optionally State, and enter the Tax Rate.
3. Choose Level 1 for the main tax.
4. Click Add Rule. Repeat for each country or state.

A rule for All Countries applies to everyone not covered by a more specific rule.

EU VAT mode

1. On the VAT Settings tab, tick Enable VAT Mode.
2. Tick Auto Set EU Tax Rates to create rules with the current standard rate for each EU country.
3. Tick Enable VAT Number Validation so WHMCS checks business VAT IDs against the EU VIES service.
4. Tick Apply reverse charge (Business Customers Tax Exempt) so valid EU businesses outside your country are not charged VAT, and set the Your Home Country field.
5. Enable Sequential Paid Invoice Numbering and the Invoice Title (for example "Tax Invoice") as required.

Clients enter their VAT number in the Tax ID field on registration or in their profile.

Taxable products

Each product has a Apply Tax option on its Details tab. Tick it for every taxable product. Untick it for items that are genuinely exempt in your jurisdiction.

Exempt a client

Open the client profile and tick Tax Exempt on the profile tab, for example for registered charities or reverse-charge customers whose VAT number could not be validated automatically.

Troubleshooting

• No tax on an invoice: the client's country has no rule, the product is not taxable, or the client is exempt.
• VAT number rejected: VIES may be temporarily unavailable, or the number format is wrong (include the country prefix, for example DE123456789).
• Existing invoices wrong after changing rules: changes only affect new invoices. Edit or recreate unpaid ones.

Next steps

• Manage invoices.
• Review invoice settings.
• Set domain pricing.