# Pricing and Taxes Understand how Frihet calculates prices, applies taxes, and manages withholdings. Each invoice line item has its own tax logic. ## Price Structure Frihet differentiates between three key concepts: ### Unit Price (Taxable Base) The price without taxes: - It is the amount on which VAT/IGIC is calculated - It is the amount declared on tax invoices - It is the one that changes when you update a product - Example: 1,000 EUR ### VAT/IGIC (Indirect Tax) Added to the price: - **VAT 21%**: Most services and products - **VAT 10%**: Some food, transport, lodging - **VAT 4%**: Books, magazines, newspapers - **IGIC 7%**: Canary Islands (replaces VAT) - **IPSI**: Ceuta and Melilla - **Exempt**: No tax (e.g., financial services) Calculation: ``` Base price: 1,000 EUR VAT 21%: + 210 EUR Client total: 1,210 EUR ``` The invoice shows both the base price and the VAT broken down. ### IRPF (Withholding Tax) Subtracted from the price for certain services: - **15%**: Services from self-employed professionals - **19%**: Technical, artistic work, consulting - **21%**: Management and administration activities - **Exempt**: Most products Calculation: ``` Base price: 1,000 EUR VAT 21%: + 210 EUR IRPF 15% (withholding): - 150 EUR Client total: 1,060 EUR (Frihet withholds 150 EUR for the Tax Agency) ``` On the invoice, it appears as "IRPF withholding" or "income tax withholding". ## Calculation per Line Item Each invoice line item has its own tax regime: ### Example 1: Physical Product with VAT ``` Product: Samsung Monitor Quantity: 2 Unit price: 200 EUR Subtotal: 400 EUR VAT 21%: 84 EUR Line total: 484 EUR ``` Frihet sums all line items for the invoice total. ### Example 2: Service with VAT + IRPF ``` Concept: Web Development (30 hours) Price/hour: 50 EUR Subtotal: 1,500 EUR VAT 21%: 315 EUR IRPF 15%: -225 EUR (withholding) Line total: 1,590 EUR (1,500 + 315 - 225) ``` Your client pays 1,590 EUR. Frihet withholds 225 EUR of IRPF for settlement. ### Example 3: Tax-Exempt Service ``` Concept: Financial Consulting Subtotal: 800 EUR VAT: Exempt (0%) IRPF: Exempt (0%) Line total: 800 EUR ``` No taxes or withholdings. ## Applying Taxes on Invoices ### By Product (Default) Each product in your catalog has taxes configured: 1. You create product "Web Development": VAT 21%, IRPF 15% 2. You add it to an invoice 3. Frihet automatically applies those taxes ### Modify per Line Item If you need to change for this specific invoice: 1. On the invoice, click on the line item 2. Open **Taxes** (collapsible section) 3. Change **VAT**: 21% → 10% 4. Change **IRPF**: 15% → 0% (e.g., foreign client exempt) 5. It recalculates automatically This change **only affects this invoice**. The product retains its original configuration. ## Discounts Discounts are applied **before calculating taxes**: ``` Original price: 1,000 EUR Discount 10%: - 100 EUR Taxable base: 900 EUR (base for VAT) VAT 21%: + 189 EUR Total: 1,089 EUR ``` ### Types of Discounts **Line-item discount**: Applicable to each product. Appears as % or absolute EUR: ``` Development: 1,500 EUR Discount: -10% (150 EUR) Subtotal: 1,350 EUR ``` **Global discount** (full invoice): Applies to the total before summing VAT: ``` Invoice subtotal: 5,000 EUR Discount 5%: -250 EUR Taxable base: 4,750 EUR VAT 21%: +997.50 EUR Total: 5,747.50 EUR ``` ### Discounts vs. Complimentaries - **Discount**: Reduces the price, appears on the invoice, client sees the reduction - **Complimentary**: Free line item (e.g., referral gift). Appears as a product with 0 EUR Use discounts for public negotiations. Complimentaries for internal gifts. ## Quantity and Unit Price Frihet applies: ``` Line total = Unit price × Quantity ``` But allows dynamic changes: ### Example: Variable Quantity ``` Product: Senior Developer Quantity: 3.5 hours (you can enter decimals) Price: 80 EUR/hour Subtotal: 280 EUR ``` Allows working with hours, fractional days. ### Change Price on Invoice If a client negotiates a special price: 1. On the invoice, select the line item 2. Edit **Unit price**: 1,200 EUR → 1,050 EUR 3. It recalculates automatically The change is **only for this invoice**. The base product is not modified. ## Different VAT Rates On the **same invoice**, different rates can coexist: ``` Line 1: Book 50 EUR (VAT 4%) → 52 EUR Line 2: Consulting service 1,000 EUR (VAT 21%) → 1,210 EUR Line 3: Software 500 EUR (VAT 21%) → 605 EUR ───────────────────────────────────────────────────── Subtotal: 1,550 EUR VAT 4%: 2 EUR VAT 21%: 345 EUR Total: 1,897 EUR ``` Frihet automatically groups by rate in the tax breakdown. ## IGIC (Canary Islands) If you are in the Canary Islands: - Frihet automatically **replaces VAT with IGIC** - Rate: 0%, 3%, 7%, 9.5% (according to the Canary Islands Tax Agency) - VAT and IGIC cannot be mixed on the same invoice Frihet detects the client's region and applies it automatically. If there's an error, edit it on the invoice. ## IPSI (Ceuta/Melilla) In Ceuta and Melilla: - IPSI replaces VAT - Rates: 0%, 4%, 8%, 12% (depending on the product) - Applies only if the client is in those autonomous cities ## IRPF Withholding Tax ### When it Applies Withholding is mandatory for: - Services from self-employed professionals (15%) - Technical work (19%) - Some specialized services (21%) Does NOT apply to: - Physical products (no IRPF) - Services from companies with CIF (except for exceptions) - Services for foreigners ### Calculation Frihet withholds automatically: ``` Base price: 1,000 EUR IRPF 15% (withholding): -150 EUR Client pays: 1,000 EUR Frihet delivers to Tax Agency: 150 EUR (annual settlement) ``` Withholding is **not an additional cost** for the client. It is deducted from the price. ### Annual Settlement At the end of the fiscal year: 1. Frihet sums all IRPF withholdings made 2. Generates **Annual Withholding Summary** 3. You use it in your **Income Tax (IRPF)** 4. You declare the total withheld on form 130/100 Example: ``` Withholdings made in 2026: Jan: 150 EUR Feb: 150 EUR ... Dec: 150 EUR TOTAL: 1,800 EUR (Appears in net amount to be received on form 130) ``` ## Equivalence Surcharge (Retail Professionals) If you are a distributor with an equivalence surcharge: 1. Go to **Settings > Tax Regime** 2. Select **Equivalence surcharge** 3. Frihet adds an additional % after VAT: ``` Price: 100 EUR VAT 21%: 21 EUR Surcharge 1.4%: 1.40 EUR Total: 122.40 EUR ``` The surcharge appears separately on the invoice. ## Special Withholding Taxes Some clients (public administrations) require additional withholding: - **Administrations**: 3% mandatory - **Telecom**: Special withholding if applicable In **Settings > Special Taxes**, enable if necessary. ## Export Tax Breakdown For auditing and declarations: 1. Go to **Reports > Tax Breakdown** 2. Date range 3. Download **Taxes Paid (VAT/IGIC)** 4. A breakdown by rate is generated: ``` VAT 21%: Total invoiced: 10,000 EUR, Tax: 2,100 EUR VAT 10%: Total invoiced: 2,000 EUR, Tax: 200 EUR VAT 4%: Total invoiced: 500 EUR, Tax: 20 EUR IGIC 7%: Total invoiced: 1,500 EUR, Tax: 105 EUR ───────────────────────────────────────── Total VAT/IGIC collected: 2,425 EUR ``` Use it to fill out form 303 (quarterly VAT). ## Regulatory Changes If the Tax Agency changes VAT rates: - Frihet notifies on the dashboard - Automatically updates available rates - New invoices use new rates - Old invoices: historical prices (auditing) ## Common Issues ### "Client is foreign, what VAT do I apply?" Depends on the service: - **Digital services to EU**: Client's VAT (reverse charge, Frihet marks it) - **Services outside EU**: 0% VAT - **Physical products**: Varies according to customs On the invoice, select **VAT exempt** and note "Export/Foreign service". ### "I changed VAT on a product, but the old invoice doesn't update" By design. Completed invoices have historical prices. It's for auditing. Create a credit note if you need a correction. ### "I have IRPF and VAT, how does it work?" Both apply: ``` Base: 1,000 EUR + VAT 21%: +210 EUR - IRPF 15%: -150 EUR (on base) = Total: 1,060 EUR ``` Client pays 1,060 EUR. Frihet settles IRPF separately.