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The position of tax authorities in a tax group is important for taxes that are taxable. If a tax is taxable, the tax amount is added to the base for calculating invoice tax for all authorities lower on the group list.
You have 2 tax authorities in a tax group. Each authority has a tax rate of 5%. The first tax is taxable, the second is not.
For a 100.00 invoice:
- The tax calculated for Authority 1 is 5% of 100.00 = 5.00. The base is 100.00.
- The tax calculated for Authority 2 is 5% of (100.00 + 5.00) = 5.25. The base is 105.00, since it includes the tax charged by Authority 1.