How NetSuite Determines the Notional Tax Code to Use for a Transaction

The notional tax rate is based on the tax code set for the item. For example, if an item has a 20% standard tax rate for local sales, the notional rate is also 20% for a B2B sale to another EU country. Because it's a notional rate, the actual rate charged is 0% (zero rated tax).

In NetSuite, the item record needs a tax code or tax schedule set for the correct nexus so that the system can find the associated tax code to use for a transaction.

Example:

Note:

NetSuite doesn't validate your tax registration number. Therefore, it's your responsibility to make sure it's correct.

If no tax code is set in the Tax Schedule field of the item record, the system gets the tax code from the Default Tax Code field on the Set Up Taxes page. If you don't set a tax schedule on the item, you may get an incorrect tax amount charged on the transaction.

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General Notices