For Subcontractors Invoices how is the RCT amount accounted for?

Hello there, accounts.

Instead of a vat rate, you can create a sales item so we can apply a reverse charge to the invoice. I'm here to guide you through the steps.

First, create a liability sales tax account for the RCT item. You may reach out to your accountant for the correct accounts to use. To add a liability account, go to the Accounting tab and select Chart of accounts.

Second, add a service item for the RCT. Then, let's associate it with the liability account. You may follow these steps:

1. From the Sales tab, select Product and services.
2. Click New.
3. Select Service.
4. Give it a Name.
5. On the Income account field, select the RCT liability account we created earlier.
6. Click Save and close.

Then, let's create an invoice and use the RTC item. 

Afterward, add a credit note for the €20. You may use the screenshot below as your visual guide:

Lastly, let's use the Receive payment button to create a reverse charge.

To learn more about sales taxes, the most commonly-used GST/VAT rates, and how you can add additional tax rates, please check out these articles:

• Set up and use sales tax in QuickBooks Online
• How do I set up sales GST/VAT rates and use them on forms?

You're always welcome to post here if you have any additional questions.