Skip to main content
Avalara Help Center

How do we make a customer tax exempt for VAT?

Overview

You would like to make a customer tax exempt in a country outside of the US or Canada.

Environment

Avalara AvaTax

Resolution

  • Unselected Global Nexus for the country in question will not return a tax result.
  • Populate the Buyer's VAT Number (only available in some integration)
    • B2B transactions: Buyer's VAT ID must be on the transaction
    • Reverse charge transactions (Purchase Invoices): Buyer's VAT ID must be on the transaction
  • Or, in the Admin Console, create an Exempt Entity tax rule making a custom entity use code (such as "Z") exempt.
    • Then use that Entity Use Code on the exempt transactions.
  • You can also use the exemption number field in your accounting system/ERP. 
    • Then, an exempt entity rule (see below) making Entity Use L exempt in that county will need to be created. 
    • This is because the Exemption number field passes into a different value than the VAT number. 
  • For Information on how to create the rule see here