Tax rate change FAQs

The following Q & A answers questions regarding how to manage reservations to accommodate tax rate changes.    

Q: In case of a tax rate change, how to close products for overlapping reservations while keeping the stay items open if you use automatic deposit settlement. Also considering that there’s a deposit for the full value of the reservation which you cannot split. 

A: You need “Ghost payments” to resolve this. For example, when there’s a tax rate change from the 1st of April: 

For a stay in both March and April, to close the stay products in March while keeping the April stay items open, you need to create ghost payments for March. Then: 

• The positive payment appears on the bill with March revenue. 
• The negative payments stay open with April revenue, so the total bill is still the same.  

The main thing you need to do is close the items on the bills. Mews also recommends not only closing the past items but also splitting the reservation. Otherwise, you risk operational limitations since you cannot touch the items closed on bills anymore. You split reservations to ensure the closed items don't affect your property’s operations in any way.    

Q: Deposits recorded in Mews but not settled yet. At the time of change in tax rate will Mews override the VAT on these postings to the new tax rate resulting in an issue with VAT? 

A: In this case Mews does not migrate tax rate changes to any closed bills or deposits. Since you already reported VAT for these items, there is no need to change anything.  

Q: How does VAT change affect reports in Mews? 

A: When there are VAT changes in the Gross tax environment, the Net price for future affected bookings changes.  

Mews runs the reservation report in Net values. For example: If the VAT level is 21% in the first booking, and 10% in the second booking, each reservation costs 100 euro Gross, and the Net amount changes according to the taxation levels. Mews Analytics and other reports apply the same logic.  

Q: Does Mews update the VAT levels in rate settings, or do properties have to do it manually?  

A: Mews manages updates in the VAT levels in Mews operations along with reservations following appropriate research in each individual legal environment. You do not need to do this manually. 

Q: Should properties update tax rate change for products as per the consumption date in the settings beforehand, or does it need to be on the date of tax rate change? 

A: No, not yet. If you update them beforehand, Mews would apply the new rate for any new walk-in reservation, and that would be incorrect.  

 

You can learn more about handling tax rate changes here.