By using the tax-inclusive pricing model, the prices you set in Guesty are treated as gross amounts. This means the tax is already included in the price, so the system extracts the tax value from the total instead of adding it on top. This ensures your financial reporting is accurate while simplifying how you manage rates across different regions and channels.
Understanding the hybrid tax model
Our hybrid financial setup allows you to mix inclusive and exclusive taxes for the same account or listing. For example, set up VAT as "inclusive" and already calculated into your pricing. Set up city tax as "exclusive" to be calculated on top of the gross amount.
Inclusive: The tax is already inside the price. Guesty extracts the tax amount from the total. (This option is currently pilot.)
Exclusive: The tax is added on top of the price. (This is how the existing tax setup works.)
If you combine inclusive and exclusive rules, the exclusive tax is calculated based on the total gross amount.
So if VAT is an inclusive tax in a gross amount of $400, an exclusive city tax of 5% is calculated on top of that $400, as $20.
Financial breakdowns on the guest folio
The guest folio remains "agnostic," meaning the end result is consistent regardless of whether you use inclusive or exclusive prices. Once a reservation is received, we apply the tax logic to break down the total.
The folio clearly displays the "net income" and the "tax amount" separately. This ensures your accounting reports stay accurate and standardized.
For example, a reservation has two different tax calculations:
- VAT tax set up as 20% of accommodation fare, inclusive
- Configured accommodation fare in Guesty = €240
- Base calculated as €240 divided by 20% = €200
- Tax is 20% of €200 = €40
- Local tourism tax set up as 5% of cleaning fee, exclusive
- Base = €60
- Tax calculated as €60 x 5% = €3
- Total = €63
The folio breakdown shows as:
- Accommodation Fare (Net): €200.00
- VAT (20%): €40.00
- Cleaning Fee (Net): €60.00
- Local Tourism Tax (5%): €3.00
- Total Charged: €303.00
Channel synchronization for inclusive taxes
To keep your pricing consistent and prevent guests from being charged twice, synchronization is handled differently for inclusive taxes.
For inclusive taxes, Guesty syncs only the "gross price" (the total amount) to the channels.
What Guesty doesn't sync
Guesty does not send tax rule setups to the channel for inclusive taxes. Since the price already includes the tax, sending the rule would cause the channel to add the tax again.
Important:
You must disable taxes on the channel's extranet to match this setup and avoid double taxation.
Limitations and modifiers
Keep the following rules in mind when setting up your taxes:
No conditional logic: Conditional taxes are not supported for tax-inclusive rules.
Markups and discounts: When using tax-inclusive pricing, Guesty calculates all markups, discounts, and promotions based on the full gross amount.
Hybrid compounding: If you combine inclusive and exclusive rules, the exclusive tax will be calculated based on the total gross amount.
New taxes or changes to existing taxes only affect newly created reservations. They cannot be applied retroactively to existing reservations.
Checklist: Setting up tax-inclusive pricing
Follow these steps to ensure your account is configured correctly for the new tax-inclusive model.
Identify your tax calculation needs: Determine which taxes are already included in your rates (gross) and which should be added on top (net).
Fixed taxes: Keep in mind that any tax set as "inclusive" is extracted from the accommodation fare. If you have an inclusive flat tax of $5, this amount is always extracted and should be calculated into your accommodation fare rates.
Update tax rules: Access each tax rule and toggle the setting to "Inclusive" where applicable.
Review channel settings: Log in to your channel extranets (like Airbnb or Booking.com) to ensure taxes are disabled to avoid charging the guest twice.
Check markups and discounts: Review your current promotions to ensure they align with calculations based on the gross price.
Test the breakdown: Open a test reservation and check the Guest Folio to confirm the "net income" and "tax amount" are separated correctly.
Create a new inclusive tax
Create the tax on the account level if it's relevant for all or most of your listings. If it's only relevant to specific listings, create it on the listing level.
- Sign in to your Guesty account.
- In the top navigation bar, click the mode selector and select Financials mode.
- Click Financial settings and select Tax configuration.
- To the right, click New tax.
- Select the tax type from the dropdown.
- Under "How do you want this tax to be calculated?", select Tax included in price.
- Enter the tax settings:
- Name: Identifies the tax in Guesty. This appears as a line item in the guest folio and guest invoice.
- Tax amount: Choose a percentage or fixed amount, and enter the amount.
- Per: Determine if the tax is per night, per guest, per stay, or per guest per night.
- Invoice items to tax: If a percentage tax, choose the items to include in the calculation. For example, calculate tax out of accommodation fare only, or accommodation fare plus specific fees.
- Click Continue.
- In the top-right corner, click Save tax configuration.
- Sign in to your Guesty account.
- In the top navigation bar, click Properties.
- Click the relevant listing. (If the listing is a multi-unit, edit the main settings of the multi-unit. The changes apply to all sub-units.)
- In the left-side menu, click Pricing & Policies, then select Tax configuration.
- If relevant, toggle off Use your account's default settings.
- To the right, click New tax.
- Select the tax type from the dropdown.
- Under "How do you want this tax to be calculated?", select Tax included in price.
- Enter the tax settings:
- Name: Identifies the tax in Guesty. This appears as a line item in the guest folio and guest invoice.
- Tax amount: Choose a percentage or fixed amount, and enter the amount.
- Per: Determine if the tax is per night, per guest, per stay, or per guest per night.
- Invoice items to tax: If a percentage tax, choose the items to include in the calculation. For example, calculate tax out of accommodation fare only, or accommodation fare plus specific fees.
- Click Continue.
- In the top-right corner, click Save tax configuration.
Change existing tax from exclusive to inclusive
Important:
Changing the tax calculation mode only affects newly created reservations. If you have taxes set up on channels, disable them to avoid double taxation.
- Sign in to your Guesty account.
- In the top navigation bar, click the mode selector and select Financials mode.
- Click Financial settings and select Tax configuration.
- Click
to the right of the relevant tax and select Edit tax. - Under "How do you want this tax to be calculated?", select Tax included in price.
- Click Continue.
- In the top-right corner, click Save tax configuration.
- Sign in to your Guesty account.
- In the top navigation bar, click Properties.
- Click the relevant listing. (If the listing is a multi-unit, edit the main settings of the multi-unit. The changes apply to all sub-units.)
- In the left-side menu, click Pricing & Policies, then select Tax configuration.
- Click to the right of the relevant tax and select Edit tax.
- Under "How do you want this tax to be calculated?", select Tax included in price.
- Click Continue.
- In the top-right corner, click Save tax configuration.