Setting the tax status of a customer

On most of your invoices and credit notes, you will have to apply some kind of tax. However, there are certain cases where this is not necessary:

• When your customer is exempt from paying tax, which usually occurs with religious, educational, or non-profit organizations.
• When your customer is a tax-registered business. In this case, the reverse charge mechanism applies, and it is your customer who collects and pays the tax on their sales.

In Quaderno, all of your customers will have one of the following tax statuses:

• Taxable : this is the default status and indicates that your customer must pay the corresponding tax.
• Exempt : your customer is exempt from paying taxes.
• Reverse charge : your customer is a tax-registered business, and you do not have to charge them tax on their purchases.

Quaderno uses this information to calculate taxes on all the invoices and credit notes you issue on behalf of each customer. If a customer informs you that you should not charge them tax on their purchases, you can change their tax status to specify whether they are exempt or if reverse charge applies.