> ## Documentation Index
> Fetch the complete documentation index at: https://help.hoopai.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Taxes — setting up and applying tax rates

> Configure tax rates, apply taxes to invoices and products, set up international VAT/GST, and understand tax-inclusive vs. tax-exclusive pricing.

The HoopAI Platform includes a built-in tax engine that lets you define tax rates, apply them to products and invoices, and comply with international VAT and GST requirements. Taxes are managed centrally in Payment Settings and can be applied globally or per line item.

<Note>
  To access tax settings, go to **Payments → Payment Settings → Taxes**. You must have at least one payment integration connected to create billable tax rates.
</Note>

***

## Tax settings overview

The Taxes section in Payment Settings is the central hub for all tax configuration. From here you can:

* Create and manage tax rates
* Set the global tax behavior (inclusive or exclusive)
* Configure international VAT nexus addresses
* Enter your Tax ID or registration number for display on invoices

Tax rates you create here become available in the invoice editor, product editor, and Point-of-Sale (POS) app.

***

## Creating a tax rate

<Steps>
  <Step title="Navigate to tax settings">
    Go to **Payments → Payment Settings → Taxes** and click **Add Tax Rate**.
  </Step>

  <Step title="Name the tax rate">
    Enter a descriptive name that will appear on invoices and order summaries — for example:

    | Name      | Common use case                               |
    | --------- | --------------------------------------------- |
    | Sales Tax | US state or local sales tax                   |
    | VAT       | European Union value-added tax                |
    | GST       | Canadian or Australian goods and services tax |
    | HST       | Canadian harmonized sales tax                 |
  </Step>

  <Step title="Set the percentage">
    Enter the tax percentage. For example, enter `10` for a 10% tax rate. The platform accepts decimals — for example, `8.875` for New York City's combined rate.
  </Step>

  <Step title="Add a Tax ID or registration number (optional)">
    Enter your tax registration number in the **Tax ID** field. This number appears in the tax breakdown section on printed and emailed invoices, which is often required for VAT compliance in the EU and other jurisdictions.
  </Step>

  <Step title="Save the tax rate">
    Click **Save**. The new rate is immediately available to apply in the invoice editor and product catalog.
  </Step>
</Steps>

<Tip>
  You can create multiple tax rates and apply more than one to a single product or invoice line item. This is useful for jurisdictions that layer state, county, and municipal taxes.
</Tip>

***

## Tax-inclusive vs. tax-exclusive pricing

The HoopAI Platform supports two global tax display modes. This setting applies across your entire account and affects how prices are shown to customers.

| Mode                        | How it works                                                                                                 | Best for                          |
| --------------------------- | ------------------------------------------------------------------------------------------------------------ | --------------------------------- |
| **Tax-exclusive** (default) | The listed price does not include tax. Tax is calculated and added on top at checkout or on the invoice.     | Most B2B billing, US sales        |
| **Tax-inclusive**           | The listed price already includes tax. The tax portion is extracted from the price rather than added on top. | EU VAT compliance, retail pricing |

<Steps>
  <Step title="Open tax settings">
    Go to **Payments → Payment Settings → Taxes**.
  </Step>

  <Step title="Set the pricing mode">
    Locate the **Tax Behavior** toggle and switch between **Tax-Exclusive** and **Tax-Inclusive** to match your business model.
  </Step>

  <Step title="Verify product pricing">
    After changing the tax behavior, review your product prices to confirm they reflect the intended customer-facing amounts. Switching modes does not change the stored price — it changes how tax is derived from that price.
  </Step>
</Steps>

<Warning>
  Changing the tax behavior setting affects all future invoices, payment links, and order forms. It does not retroactively alter existing invoices. Review your product catalog and any live funnels after changing this setting.
</Warning>

***

## Applying taxes on invoices

Taxes can be applied to an invoice in three ways. You choose the method inside the invoice editor for each individual invoice.

<Steps>
  <Step title="Open the invoice editor">
    Go to **Payments → Invoices & Estimates** and open or create an invoice.
  </Step>

  <Step title="Enable tax">
    Scroll to the totals section and click **Enable tax** (or the **+ Tax** button depending on your layout).
  </Step>

  <Step title="Choose the application method">
    Select one of the three methods:

    | Method            | What it does                                                                                    |
    | ----------------- | ----------------------------------------------------------------------------------------------- |
    | **Automatically** | Applies the assigned tax rate to every line item based on each product's configured tax setting |
    | **Per item**      | Lets you manually choose a tax rate for each individual line item on the invoice                |
    | **To subtotal**   | Applies a single tax rate once to the invoice subtotal, regardless of individual products       |
  </Step>

  <Step title="Verify the tax breakdown">
    The invoice preview panel on the right shows the tax name, rate percentage, calculated amount, and Tax ID for each applied tax. Hover over the tax total in the Order Summary to see a detailed line-by-line breakdown.
  </Step>
</Steps>

<Note>
  Tax is not required on every invoice. Leaving the tax field blank simply means no tax is charged on that invoice. You can add or remove tax on any draft invoice at any time before sending.
</Note>

***

## Applying taxes to products

Setting a default tax rate on a product means the correct tax is applied automatically whenever that product appears on an invoice, payment link, funnel, or store — without needing to configure it each time.

<Steps>
  <Step title="Open the product editor">
    Go to **Payments → Products** and open an existing product or click **+ New Product**.
  </Step>

  <Step title="Enable tax on the product">
    In the product editor, locate the **Tax** section and toggle on **Charge Tax on This Product**.
  </Step>

  <Step title="Select the tax rate(s)">
    Choose one or more tax rates from the dropdown. All rates you have created in Payment Settings appear here. You can link multiple tax rates to a single product — the system will calculate and apply all of them.
  </Step>

  <Step title="Save the product">
    Click **Save**. The selected tax rates will be pre-applied whenever this product is added to an invoice or order.
  </Step>
</Steps>

<Tip>
  Assigning tax rates directly to products is the most reliable method for multi-product businesses. It prevents tax from being forgotten on individual invoices and ensures consistency across all sales channels.
</Tip>

***

## Multiple taxes on one product

The HoopAI Platform supports applying multiple tax rates to a single product simultaneously. This is useful when you operate in jurisdictions with layered taxation — for example, a state tax rate plus a county tax rate.

To apply multiple taxes:

1. In the product editor, after toggling on **Charge Tax on This Product**, use the tax rate dropdown to select each applicable rate.
2. Each rate you select is added as a separate tax line.
3. On the customer-facing invoice, each tax rate is displayed as its own line item in the tax breakdown, making the total transparent.

The Order Summary at the bottom of the invoice shows a cumulative tax total, while hovering over the tax row reveals the individual breakdown of each rate and its calculated amount.

***

## International and automatic taxes (VAT/GST)

For businesses selling to customers in multiple countries or states, the HoopAI Platform supports configuring nexus-based automatic tax rates.

<Steps>
  <Step title="Access automatic tax settings">
    Go to **Payments → Payment Settings → Taxes** and find the **Automatic Taxes** or **International Tax** section.
  </Step>

  <Step title="Configure nexus addresses">
    A nexus is a location where you have a tax obligation. Add each country or state where your business has nexus by entering the corresponding address. This tells the platform where to apply tax automatically.
  </Step>

  <Step title="Enter your Tax ID">
    Enter your VAT registration number, GST number, or equivalent tax ID for each jurisdiction. This number appears on invoices sent to customers in that region, satisfying local invoice compliance requirements.
  </Step>

  <Step title="Enable for sales channels">
    Automatic taxes are supported across the following HoopAI Platform sales channels:

    * Funnels and landing pages
    * Payment links
    * Invoices
    * eCommerce stores
    * All connected payment providers
  </Step>
</Steps>

<Note>
  Automatic VAT/GST configuration requires your business to manage its own nexus determination. The platform applies the rates you configure but does not independently determine where you have a legal tax obligation. Consult a tax advisor for compliance guidance specific to your jurisdiction.
</Note>

***

## Tax display on invoices

When taxes are applied, the invoice presents them clearly to both you and the customer:

* **Line-item level**: Each product line shows the applicable tax rate name next to the item price.
* **Tax breakdown section**: A dedicated section below the subtotal lists each tax rate by name, percentage, and calculated amount.
* **Tax ID display**: If a Tax ID is configured for a rate, it appears in the tax breakdown section — a common requirement for VAT invoices in the EU.
* **Order Summary**: The cumulative tax total is shown in the Order Summary at the bottom. Hovering over this total displays a tooltip with the full breakdown.

***

## Deleting a tax rate

<Warning>
  Deleting a tax rate removes it from all products and invoice templates it is currently linked to. This action cannot be undone. Future invoices and products will no longer have that tax rate applied. Past invoices are not affected.
</Warning>

To delete a tax rate:

1. Go to **Payments → Payment Settings → Taxes**.
2. Find the rate you want to remove.
3. Click the **three-dot menu** next to the rate and select **Delete**.
4. Confirm the deletion in the dialog.

After deletion, any products that had that rate assigned will no longer charge that tax. Review your product catalog after deleting a rate to ensure the correct tax rates are still applied.

***

## Point-of-Sale (POS) taxes

Taxes in the HoopAI Platform mobile app (POS) work as follows:

* Tax rates must be created first in the **web application** under **Payments → Payment Settings → Taxes**.
* Once created, tax rates can be linked to products in the product editor in the web app.
* When those products are sold through the POS app, the configured tax rates are applied automatically.

<Note>
  You cannot create new tax rates directly in the mobile POS app. All tax rate creation and management is handled in the web application.
</Note>

***

## Frequently asked questions

<AccordionGroup>
  <Accordion title="Is tax required on every invoice?">
    No. Tax is entirely optional on invoices. If you do not add a tax rate, no tax is charged. You can apply tax on a per-invoice basis or rely on product-level tax settings to apply it automatically.
  </Accordion>

  <Accordion title="Can I apply different tax rates to different products on the same invoice?">
    Yes. Use the **Per item** tax method in the invoice editor to assign a different tax rate to each line item individually. This is useful when different products have different tax classifications — for example, if some items are taxable and others are exempt.
  </Accordion>

  <Accordion title="What is the difference between tax-inclusive and tax-exclusive pricing?">
    With **tax-exclusive** pricing (the default), the price shown to the customer does not include tax — tax is calculated and added on top at checkout. For example, a $100 product with 10% tax becomes $110 at checkout.

    With **tax-inclusive** pricing, the price shown already includes the tax. The system extracts the tax component from the listed price. The same $100 product with 10% inclusive tax means the actual revenue is $90.91 and the tax is \$9.09.
  </Accordion>

  <Accordion title="How do I handle international VAT for EU customers?">
    Configure a VAT tax rate in **Payments → Payment Settings → Taxes**, enter your VAT registration number in the Tax ID field, and set the applicable rate for the EU jurisdiction. Add your EU nexus address in the Automatic Taxes section. When invoices are sent to EU customers, the VAT rate is applied and your VAT number appears on the invoice as required by EU law.
  </Accordion>

  <Accordion title="Can I set up automatic tax calculation for US sales tax?">
    Yes. Use the Automatic Taxes feature to configure nexus addresses for each US state where you have a tax obligation. Once configured, the appropriate rate is applied automatically based on the customer's location. Note that US sales tax rates vary by state, county, and municipality — ensure your configured rates reflect the correct combined rate for each nexus location.
  </Accordion>

  <Accordion title="What happens if I change a tax rate — do past invoices update?">
    No. Changing the percentage on an existing tax rate does not retroactively update any invoices that have already been sent or paid. Only invoices created after the change are affected. If you need to correct a past invoice, you would need to void and reissue it.
  </Accordion>

  <Accordion title="Is VAT and GST supported?">
    Yes. You can create tax rates with any name — including VAT, GST, HST, or any jurisdiction-specific label. The platform does not restrict tax rate names, so you can configure it to match your local requirements.
  </Accordion>

  <Accordion title="Can I show my tax registration number on invoices?">
    Yes. When creating or editing a tax rate, enter your registration number in the **Tax ID** field. This number will appear in the tax breakdown section of every invoice where that rate is applied. This satisfies the invoicing requirements of many jurisdictions, including EU VAT rules that require the seller's VAT number to appear on B2B invoices.
  </Accordion>
</AccordionGroup>

***

## Automatic tax category IDs

When using Stripe's automatic tax calculation, each product can be assigned a **Tax Category ID** (also known as a tax code) that tells Stripe how to classify the product for tax purposes.

Common tax category IDs:

| Category                     | Code            | Description                          |
| ---------------------------- | --------------- | ------------------------------------ |
| **General — Tangible goods** | `txcd_99999999` | Default for physical products        |
| **Digital goods**            | `txcd_10000000` | Software, e-books, digital downloads |
| **SaaS / Cloud services**    | `txcd_10060001` | Subscription software services       |
| **Consulting services**      | `txcd_20060005` | Professional consulting and advisory |
| **Coaching / Training**      | `txcd_20060007` | Educational services and training    |

To assign a tax category:

1. Open the product in **Payments > Products**.
2. In the tax section, enter the **Product Tax Code** matching the product type.
3. Save the product. Stripe uses this code to apply the correct tax rate based on the customer's location and the product classification.

<Note>
  Tax category IDs are used by Stripe's automatic tax engine. They are not required if you are manually creating and assigning tax rates in HoopAI's tax settings. The full list of Stripe tax codes is available in your Stripe dashboard under Products > Tax codes.
</Note>

***

## VAT frequently asked questions

<AccordionGroup>
  <Accordion title="Do I need to charge VAT on digital products sold to EU customers?">
    Yes. EU rules require VAT on digital products and services sold to consumers in the EU, regardless of where your business is located. The rate applied is the rate of the customer's country of residence (destination principle).
  </Accordion>

  <Accordion title="How do I handle VAT for B2B transactions within the EU?">
    For B2B sales within the EU, the reverse charge mechanism may apply. The buyer (not the seller) accounts for VAT. Collect the buyer's VAT registration number and validate it. If valid, you can issue the invoice without VAT and note "Reverse charge applies" on the invoice.
  </Accordion>

  <Accordion title="What is the VAT MOSS / OSS scheme?">
    The One-Stop Shop (OSS) scheme allows businesses selling digital services to EU consumers to register in one EU country and file a single VAT return covering all EU member states. This simplifies compliance — you do not need to register for VAT in every EU country where you have customers.
  </Accordion>

  <Accordion title="Do I need to collect VAT on courses and memberships?">
    In most EU countries, online courses and membership access are classified as electronically supplied services and are subject to VAT. The rate depends on the customer's country. Consult a tax advisor for your specific situation.
  </Accordion>

  <Accordion title="How do I issue a VAT-compliant invoice?">
    A VAT-compliant invoice must include: your business name and address, your VAT registration number, the customer's name and address, a unique invoice number, the date, a description of goods/services, the net amount, the VAT rate, the VAT amount, and the gross total. The HoopAI invoice template includes all of these fields when tax is configured correctly.
  </Accordion>
</AccordionGroup>