The VAT on my invoice differs from the calculator by one cent; which one is right?
Usually both are arithmetically right. The calculator applies the rate to one amount and rounds once, while invoicing software often rounds the tax on each line and then adds the lines up, and the two methods can land a cent or two apart. Which method your invoices should follow is a question for your accountant, not for the tool.
Where the cent comes from
Picture an invoice with three lines, each 33.35 before tax, and 15 entered as the rate. Here it is worked both ways, with every figure taken from the VAT calculator itself.
- Rounding per line: the tax on one line is exactly 5.0025, shown as 5.00. Three lines give 15.00 of tax.
- Rounding once: the lines add up to 100.05, whose tax is exactly 15.0075, shown as 15.01.
One cent apart, and nobody made a mistake. In the first case a sliver of a cent was dropped on every line; in the second the slivers were added together before rounding.
How to tell which method your system uses
Look at the invoice. Is there a tax column next to each line? If so, the system most likely rounds per line and the tax total is that column added up. If tax appears only once, under the subtotal, it is rounded on the total.
To match the first method with the calculator, run each line on its own in add mode and add the tax figures shown. To match the second, enter the sum of the net lines once.
When the gap points to a real error
A cent or two on an invoice with many lines is normal. If the gap is a whole unit or more, look for something else:
- A line was entered at a tax-inclusive price and then had tax added again.
- The rate stored in the system is not the rate you typed into the calculator.
- A discount was applied before tax in one place and after tax in another.
The calculator will not fix those on its own, but it helps you isolate the line causing the gap: work the lines one at a time and compare.
If you write the invoice yourself
If you build invoices with the Basic invoice generator, remember it is a basic template, not a certified e-invoicing system. Pick one rounding method and use it on every invoice, and ask your accountant which one suits the requirements where you trade before you settle on it.
Common questions
Why does the calculator show 15.01 and not 15.0075?
It displays amounts rounded to two decimals while keeping the exact figure in the calculation itself.
Should I edit the invoice to match the calculator?
Not over a rounding difference alone. Confirm with your accountant which rounding method is expected of you first.