Table of contents

This article deals with rounding differences in a software. Below is an explanation of how rounding differences can occur and why it is difficult to find a uniform solution.

Different calculation methods for the tax

The main reason for rounding differences are the different methods for the addition of VAT in the line items. There are 2 methods that are are recognized by law.

Variant 1: Column-wise (vertical) calculation of VAT

To calculate the VAT by column, first determine the net sum per tax rate for the entire invoice. From this, the value added tax, using the legally required tax rate. The VAT total is shown separately on the invoice for each tax rate.

Example: A customer invoice is issued with 3 item lines.

Invoice item 1: An item costs EUR 0.99 net. Adding the VAT of 19%, the gross price is 1.18 EUR, quantity: 1

Invoice item 2: An item costs EUR 0.99 net. Adding the VAT of 19 %, the gross price is 1.18 EUR, quantity: 1

Invoice item 3: An item costs EUR 0.99 net. Adding the VAT of 19 %, the gross price is 1.18 EUR, quantity: 1

Calculation: (0,99 EUR x 3) X 1,19 = 3,53 EUR

Variant 2: Row-by-row (horizontal) calculation of VAT

In addition, it is possible to calculate the value-added tax line by line. In this case the value added tax is calculated for each individual item line, using the appropriate tax rate. The total is calculated as the sum of the VAT amounts in the individual item lines. The VAT is also shown separately on the invoice separately for each tax rate.

Example: An invoice is issued with 3 item lines:

Invoice item 1: An item costs EUR 0.99 net. Adding the VAT of 19%, the gross price is 1.18 EUR, quantity: 1

Invoice item 2: An item costs EUR 0.99 net. Adding the VAT of 19 %, the gross price is 1.18 EUR, quantity: 1

Invoice item 3: An item costs EUR 0.99 net. Adding the VAT of 19 %, the gross price is 1.18 EUR, quantity: 1

Calculation: (0,99 EUR + 0,19 EUR) x 3 = 3,54 EUR

Difference in the calculation in the examples

Depending on the calculation method, this results in a rounding difference of 0.01 EUR. This shows that amounts with decimal places may lead to rounding differences.

Transfer of orders from the store

Even with well-known online stores there are rounding errors. When working in conjunction with an ERP system, it is conceivable that the store itself has already created rounding errors. In this case, it is possible that the customer has already paid the Store's receipt total. Xentral would take the rounded numbers and process them accordingly to avoid further rounding differences. 

Very small prices

Some industries quote prices below one cent. Therefore, when working with prices that are too small, rounding differences may also occur. Therefore Xentral shows a lot of decimal places. Nevertheless, even in Xentral rounding errors can occur due to multiplication with quantities.

Procedure for rounding differences

If rounding differences occur during payment import, they should be eliminated. This is especially important in the case of a high volume of orders. To do this, check in the store system to see at which point in time these differences occur.

Removing rounding differences

In some cases, it is unavoidable that differences are transferred to the tax software. Therefore, these are to be posted in the software to an appropriate account. It is important that the rounding amounts are in the cent range, otherwise the origin for larger differencesneeds to be found.