You can turn an expense/income category into a VAT category, which means that it receives all the splits that actually make up the VAT payment towards the government. You can also enter a specific percentage rate.

Categories can be assigned a VAT category, which allows KMyMoney to split a transaction for a category into two parts, one for the category and one for the VAT. Depending on the setting of the gross/net amount switch, the amount you enter for the transaction is the gross or net amount.

Example: In Germany, there are three VAT percentages (0%, 7%, and 19%). So I have a main category "VAT paid" and three subcategories, one for each percentage rate. I create these on both the income and the expense sides so that I have six categories in total. For the goods I buy, I select one of the above mentioned categories as the "VAT category assignment".

When I buy goods, I enter them into a transaction. Let's assume I have selected the gross amount entry method, once I enter the category and amount, KMyMoney will recognize that there's a VAT assignment and calculate the VAT part, create a second split with the VAT account and VAT amount and reduce the category amount.

In contrast, if you have selected the net amount entry method, the amount you enter is treated as excluding VAT. KMyMoney will calculate the VAT portion, create a separate split for the VAT account, and leave the category amount as entered.

The same applies to income categories but the other way around. Hope that makes sense.