2. Two Methods: Prices With Tax / Without Tax

Erply supports two different principles for calculating invoice totals.

1. Calculation based on net prices ("NetPrice" for short);
2. Calculation based on prices with tax ("PriceWithTax" for short).

These two approaches provide different calculation results — to match users' expectations.

Choice of a method depends on account country, sales document type, and configuration parameters. However, just to illustrate the general reach of these two methods, we generally use:

1. "NetPrice" method:
   1. For all sales documents in US and Canada;
   2. For invoice-waybills, invoices, waybills, sales orders, quotes, and prepayment invoices in other countries.
2. "PriceWithTax" method:
   
   1. For POS receipts in countries except US and Canada.

Example: US Retail vs. European Retail

In the US, shoppers pay sales tax which is added to the sale at checkout. Price tags always display net price.

In most other countries, shoppers pay value-added tax (VAT) which is already factored into the retail price. Price tags always display price with VAT.

These two approaches can yield a different result when discount is applied. Let us consider an example: initial net price $7.45, tax 14%, customer gets a 10% discount.

In the US, the following calculation would be correct:

• The discount of 10% is applied to the initial price, yielding $6.71.
• Then the 14% tax is added - final price $7.65

In other countries, the following calculation is correct:

• The 14% tax is added to the initial price, yielding $8.49 (the price which customer sees on product tag).
• Then a discount of 10% is applied to the price - final price $7.64.

Doing operations in a different order gives a different result.