The tax that applies to a transaction, and the accounts it uses, are not always the same; they depend on the situation. Fiscal positions handle that. This piece explains fiscal positions in Odoo.
The problem fiscal positions solve
A business's default tax and accounts apply to its ordinary transactions. But not every transaction is ordinary. Depending on the situation, who the customer or vendor is, where they are, the nature of the transaction, a different tax may apply, or different accounts. A transaction in one situation may need different tax handling from the same transaction in another. If this were handled by working out and applying the right tax and accounts by hand for every transaction that differs from the default, it would be effort and a source of error. Fiscal positions solve this by adapting the tax and accounts to the situation automatically.
What a fiscal position is
A fiscal position, in Odoo, is a rule that adapts the tax and the accounts to a particular situation. It says, in effect, that in this situation, the tax that would ordinarily apply is replaced or adjusted, and the accounts may be too. Different fiscal positions correspond to different situations. A fiscal position is the mechanism by which Odoo applies the right tax and accounts for a situation that differs from the default.
How fiscal positions work
A fiscal position is associated with the situations it applies to, and it can be associated with customers or vendors according to their situation. Then, when a transaction is made with that customer or vendor, the fiscal position automatically adapts the tax and accounts to that situation. The business does not have to remember and apply the right tax and accounts for the situation; the fiscal position does it. So fiscal positions automate the correct handling of transactions whose tax or accounts differ from the default, based on the situation.
Why fiscal positions matter
Fiscal positions matter because they make tax and account handling correct and automatic across the different situations a business encounters. A business dealing only ever with one situation would not need them; a business dealing with varied situations, customers or vendors in different places or of different kinds, transactions of different natures, does. Fiscal positions mean that, whatever the situation, the right tax and accounts are applied, by the configured rule, rather than relying on someone to know and apply the correct handling for each situation. This is more accurate and less effort, and, since tax is a compliance matter, getting it right automatically is genuinely valuable.
Setting up fiscal positions
Setting up fiscal positions means identifying the genuine situations the business's transactions involve where the tax or accounts differ from the default, and configuring a fiscal position for each, then associating the fiscal positions with the customers and vendors according to their situations. Because fiscal positions are about tax and accounts, and tax is a compliance matter with specific rules, setting up fiscal positions correctly is an area for proper accounting and tax knowledge. Set up well, fiscal positions are what let a business handle the varied tax situations of its transactions correctly and automatically.
The takeaway
Fiscal positions in Odoo are rules that automatically adapt the tax and the accounts to a particular situation, so the right tax and accounts are applied to a transaction depending on the customer, vendor, or nature of the transaction. They solve the problem that the correct tax and accounts vary with the situation, by automating the correct handling rather than relying on it being worked out by hand. Set up fiscal positions for the genuine situations the business encounters, with proper accounting and tax knowledge. For how we approach Odoo, see our ERP practice.