There are 3 possible methods for calculating totals. Each method presents risks of rounding, so there is no perfect, universal method, and each has an influence on the total amounts.
To illustrate each method, we will use the following item line:
PU excl. VAT: €4.08
VAT: 20%
Quantity: 3
1st method: Total of each column (independently): the calculation is based on the amount in each column (excluding VAT, VAT, including VAT) independently of each other (by adding together the totals excluding VAT for each item line, then the totals including VAT for each line and the tax totals for each line.
Example for our item line at €4.08 excluding VAT at 20% VAT, qty 3: the totals would be as follows:
Total excl. VAT = 4.08 * 3 = 12.24 €
Total VAT = 0.82 * 3 = 2.46 €
Total incl. VAT = 4.90 * 3 = 14.70 €
2nd method: Total of the column including VAT then giving the totals excluding VAT and VAT: the calculation is based on the amount in the column including VAT (by adding the totals including VAT of each product line), then deducting the rates excluding VAT and VAT.
Example for our item line at €4.90 incl. VAT at 20% VAT, qty 3: the totals would be as follows:
Total incl. VAT = 4.90 * 3 = 14.70 €
Total excl. VAT = 14.70 / 1.2 = 12.25 €
Total VAT = 14.70 - 12.25 = 2.45 €
3rd method: Total of the column before tax then giving the totals including tax and VAT: the calculation is based on the amount in the column before tax (by adding the totals before tax for each product line), then deducting the totals including tax and VAT.
Example for our item line at €4.08 excluding VAT at 20% VAT, qty 3: the totals would be as follows:
Total excluding VAT = 4.08 * 3 = 12.24 €
Total including VAT = 12.24 * 20% = 14.69 €
Total VAT = 14.69 - 12.24 = 2.45 €
For Agoserve, the method chosen is the 3rd, because it is the one recommended by the DGCCRF.
Method 2 is not recommended if accounting journals are generated, which is often the case for our Agoserve users.
You can see below the inconsistency in our case due to our method 3:
PU incl. VAT: 4.90 €
Total incl. VAT: 14.69 € (Or 4.90 * 3 = 14.70 €)
However, you may notice that the PU incl. VAT is not shown on the invoice. This avoids highlighting the rounding-off calculation, which could confuse your customer.