More Related Content Similar to Configuring sap-for-european-vat-–-implementation-tips-and-tricks-from-the-experts-ryan-ostily-and-roger-lindelauf-meridian-global-services Similar to Configuring sap-for-european-vat-–-implementation-tips-and-tricks-from-the-experts-ryan-ostily-and-roger-lindelauf-meridian-global-services (20) More from Farooq Wangde (20) Configuring sap-for-european-vat-–-implementation-tips-and-tricks-from-the-experts-ryan-ostily-and-roger-lindelauf-meridian-global-services2. Configuring SAP for European VAT – Implementation tips and tricks from the experts
Birmingham
26 November 2013
3. 11/29/2013 3
Roger Lindelauf
Director ERP VAT Consulting
Meridian Global Services
Ryan Ostilly
Commercial Director – Tax Technology
Meridian Global Services
Your Speakers
© 2013 Meridian Global Services. All rights reserved.
Speakers
4. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
Introduction to tax determination in SAP
Case 1: Drop shipments
Case 2: Triangulation
Case 3: Customer pickups (EXW deliveries)
Tip: Avoid complexity in condition records
Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 4© 2013 Meridian Global Services. All rights reserved.
5. Workshop Objectives
What we will present:
Day-to-day, simple business flows, that occur in your organisation
Executed in a standard SAP system
Revealing some of SAP’s shortcomings in VAT determination
Presenting possible solutions to overcome these
What we aim to achieve:
Discover where and why standard SAP will not correctly determine VAT
Apply this knowledge to your business and assess impact
Discover ‘best practice’ solutions to overcome these challenges
11/29/2013 5© 2013 Meridian Global Services. All rights reserved.
6. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
Introduction to tax determination in SAP
Case 1: Drop shipments
Case 2: Triangulation
Case 3: Customer pickups (EXW deliveries)
Tip: Avoid complexity in condition records
Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 6© 2013 Meridian Global Services. All rights reserved.
7. A short background:
• SAP designed tax determination logic over 25 years ago
• Back then, VAT was a relatively simple tax:
– VAT treatment on most EU cross-border trade of goods treated as ‘exports’
– Little concept of cross-border VAT registrations
– No Intra EU exemptions, simplifications, triangulation, Intrastats , EC Sales lists, etc.
– No requirement for ‘Plants Abroad’ for intra-company, cross-border stock movements
• But the world has since changed:
– EU VAT rules and disclosure requirements have changed significantly and regularly
– Businesses have become more international
– Migration to common ERP platforms and standards
– Supply-chain and corporate restructuring is common practice
– Greater focus on indirect tax compliance
• Tax logic in SAP has not changed fundamentally in 25 years
Introduction to VAT determination in SAP
11/29/2013 7© 2013 Meridian Global Services. All rights reserved.
8. Standard SAP: Output VAT determination
Tax
Destination
Country
Basic characteristics for output tax determination
Based on ‘Tax Departure Country’
Based on ‘Tax Destination Country’
Classification of your customer
(liable, not liable, same fiscal entity, etc)
Classification of your material
(high, low, zero rated, service, etc)
VAT registration number
(EU relevant)
Customer
Material
Tax
Departure
Country
Tax treatment (VAT code)
VAT ID
Access Sequence
Condition Records
Logic engine
Master Data
11/29/2013 8© 2013 Meridian Global Services. All rights reserved.
9. Access sequence (simplified)
or
Cross border transaction ?
Domestic transaction ?
Tax condition records
Standard SAP: Output VAT determination
11/29/2013 9© 2013 Meridian Global Services. All rights reserved.
11. Master data
VAT ID number of your customer
Domestic VAT ID
Foreign VAT ID
numbers of your
customer
11/29/2013 11© 2013 Meridian Global Services. All rights reserved.
Foreign VAT ID’s
14. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
Introduction to tax determination in SAP
Case 1: Drop shipments
Case 2: Triangulation
Case 3: Customer pickups (EXW deliveries)
Tip: Avoid complexity in condition records
Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 14© 2013 Meridian Global Services. All rights reserved.
15. Case 1
Drop shipment from the UK and
an onward domestic sale within Belgium
11/29/2013 15© 2013 Meridian Global Services. All rights reserved.
16. Case 1
VAT treatment for the above commercial invoice for VAT:
Domestic sale Belgium 21% VAT
Sold-to/Payer
190000
‘BE customer’
BE
Company code
BE10
Commercial
Invoice
Goods
Intercompany
Invoice
Company code
UK01
Plant UK01
UK
Ship-to 190000
BE customer
11/29/2013 16© 2013 Meridian Global Services. All rights reserved.
17. Case 1
Departure
country
Destination
country
CTC MTC VAT ID Tax
code
Tax code description
BE BE 1 1 BE0000009797 B3 BE: 21% output VAT
Expected result in UAT:
Sold-to/Payer
190000
‘BE customer’
BE
Company code
BE10
Commercial
Invoice
Goods
Intercompany
Invoice
Company code
UK01
Plant UK01
UK
Ship-to 190000
BE customer
11/29/2013 17© 2013 Meridian Global Services. All rights reserved.
18. Case 1
Question: How will standard SAP treat the commercial invoice for VAT?
a) 21% domestic VAT BE
b) 20% domestic VAT UK
c) Exempt (0%) due to an Intra-Community supply of goods from UK to BE
Sold-to/Payer
190000
‘BE customer’
BE
Company code
BE10
Commercial
Invoice
Goods
Intercompany
Invoice
Company code
UK01
Plant UK01
UK
Ship-to 190000
BE customer
11/29/2013 18© 2013 Meridian Global Services. All rights reserved.
19. Case 1
Answer: How will standard SAP treat the commercial invoice for VAT?
a) 21% domestic VAT BE
b) 20% domestic VAT UK
c) Exempt (0%) due to an Intra-Community supply of goods from UK to BE
Sold-to/Payer
190000
‘BE customer’
BE
Company code
BE10
Commercial
Invoice
Goods
Intercompany
Invoice
Company code
UK01
Plant UK01
UK
Ship-to 190000
BE customer
11/29/2013 19© 2013 Meridian Global Services. All rights reserved.
20. Case 1
How did standard SAP arrive at 0% Intra Community supply from UK to BE?
1) The destination country is determined as BE (from the ‘ship-to’)
2) The legal partner for VAT is customer 190000
3) SAP determines the country of the delivering plant as the tax departure country (UK)
4) SAP determines 2 different EU countries, with respective VAT IDs and wants to treat this
as an Intra-Community supply of goods
Sold-to/Payer
190000
‘BE customer’
BE
Company code
BE10
Commercial
Invoice
Goods
Intercompany
Invoice
Company code
UK01
Plant UK01
UK
Ship-to 190000
BE customer
11/29/2013 20© 2013 Meridian Global Services. All rights reserved.
21. Requirements for Access sequence steps
Standard SAP
1: Export / Intra EU:
Extensive
Is the departure country different from the destination country?
Is the departure country and the destination country within the EU?
Does your customer have a VAT ID number?
NO
Yes
Yes
Yes
NO
2: DomesticNO
2: Domestic
Departure
country
Destination
country
Customer
tax class.
Material
tax class.
Tax
%
Tax code
GB BE 1 1 0% Intra community supply
11/29/2013 21© 2013 Meridian Global Services. All rights reserved.
Case 1
23. Case 1 - Invoice Header / VAT ID
11/29/2013 23© 2013 Meridian Global Services. All rights reserved.
24. Case 1 - Condition Analysis
11/29/2013 24© 2013 Meridian Global Services. All rights reserved.
Export step selected (incorrect)
Departure country = “GB”
25. Case 1 - Selected Tax Condition Record
11/29/2013 25© 2013 Meridian Global Services. All rights reserved.
Condition record selected
Incorrect tax percentage
Due to incorrect tax departure country
Incorrect tax code
26. Case 1
Expected result in UAT:
Departure
country
Destination
country
CTC MTC VAT ID Tax
code
Tax code description
GB BE 1 1 BE0000009797 GA GB: Intra community supply of goods
Actual result in UAT:
Departure
country
Destination
country
CTC MTC VAT ID Tax
code
Tax code description
BE BE 1 1 BE0000009797 B3 BE: 21% output tax
Sold-to/Payer
190000
‘BE customer’
BE
Company code
BE10
Commercial
Invoice
Goods
Intercompany
Invoice
Company code
UK01
Plant UK01
UK
Ship-to 190000
BE customer
X
11/29/2013 26© 2013 Meridian Global Services. All rights reserved.
27. Case 1
How to ensure that the correct tax departure country is determined?
(a) dummy condition records / additional fields in access sequence; or
(b) customise SAP to force the departure country = country of Company Code; or
(c) implement a flexible (table based) modification to derive the correct tax departure
country based on various characteristics (best practice)
Sold-to/Payer
190000
‘BE customer’
BE
Company code
BE10
Commercial
Invoice
Goods
Intercompany
Invoice
Company code
UK01
Plant UK01
UK
Ship-to 190000
BE customer
Note: Make sure, that if the tax departure country is re determined, also the CTC
and MTC is re determined, as these are based on the tax departure country
11/29/2013 27© 2013 Meridian Global Services. All rights reserved.
29. Case 1 - Condition Analysis
11/29/2013 29© 2013 Meridian Global Services. All rights reserved.
Departure country = “BE”
Domestic step is now selected
30. Case 1 - Selected Tax Condition Record
11/29/2013 30© 2013 Meridian Global Services. All rights reserved.
Condition record selected
Based on correct departure country
Correct tax code selected
Correct VAT rate applied
31. Case 1
Expected result in UAT:
Departure
country
Destination
country
CTC MTC VAT ID Tax
code
Tax code description
BE BE 1 1 BE0000009797 B3 BE: 21% output tax
Actual result in UAT after system modifications:
Departure
country
Destination
country
CTC MTC VAT ID Tax
code
Tax code description
BE BE 1 1 BE0000009797 B3 BE: 21% output tax
Sold-to/Payer
190000
‘BE customer’
BE
Company code
BE10
Commercial
Invoice
Goods
Intercompany
Invoice
Company code
UK01
Plant UK01
UK
Ship-to 190000
BE customer
11/29/2013 31© 2013 Meridian Global Services. All rights reserved.
32. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
Introduction to tax determination in SAP
Case 1: Drop shipments
Case 2: Triangulation
Case 3: Customer pickups (EXW deliveries)
Tip: Avoid complexity in condition records
Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 32© 2013 Meridian Global Services. All rights reserved.
33. Case 2 – Triangulation
Specifics around Triangulation and (external) party suppliers
Country specific rules : is triangulation allowed in all cases?
If the entity (either affiliate or external party) that delivers the goods is not configured on
your SAP system, the ‘departure country’ in not known during the sales order process /
billing process
Solution
Option 1: train sales order staff to manually determine ‘Triangulation’
Option 2: teach SAP to recognise triangulation deals and the corresponding country
specific rules
11/29/2013 33© 2013 Meridian Global Services. All rights reserved.
34. Case 2
Party 'B’ applies triangulation, and exempts the transaction from VAT
Standard SAP requires manual intervention to achieve this
The user must ‘tick a box’ in the sales order to indicate a triangular deal
Consider the following complications….
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE
BE
Goods
Intercompany
invoice
Commercial
invoice
11/29/2013 34© 2013 Meridian Global Services. All rights reserved.
35. Case 2
Party 'B’ cannot apply triangulation, as it is VAT registered in NL (country ‘C’)
Party 'B’ must report an acquisition in NL
As Party 'B’ is not established in NL, it needs to apply the extended reverse-charge
Consider a further complication…......
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
Established in NL
VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE
and
VAT Reg in NL
Goods
Intercompany
invoice
BE
Commercial
invoice
11/29/2013 35© 2013 Meridian Global Services. All rights reserved.
36. Case 2
Party 'B’ cannot apply triangulation, as it is VAT registered in NL (country ‘C’)
Party 'B’ must report an acquisition in NL
As Party 'C’ is not established in NL, Party 'B’ cannot apply the extended reverse charge.
Party 'B’ must therefore apply domestic NL VAT at 21%
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
NOT Established in NL
Only VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE
and
VAT Reg in NL
BE
Goods
Intercompany
invoice
Commercial
invoice
11/29/2013 36© 2013 Meridian Global Services. All rights reserved.
37. Case 2
Solution option 1: Manual intervention
Sales order staff or customer services representatives (CSR) are responsible
for setting up sales orders in SAP.
In order to apply the correct VAT rules in standard SAP, train the CSR to
recognise possible ‘Triangular deals’ and train them to apply all various country
specific rules.
If they still can remember and apply correctly all relevant rules, train the CSR
to manually check the box ‘EU triangular deal’ within the sales order.
11/29/2013 37© 2013 Meridian Global Services. All rights reserved.
38. Case 2
Solution Option 1: Manually tick the box ‘EU triangular deal’
11/29/2013 38© 2013 Meridian Global Services. All rights reserved.
39. Case 2
Departure
country
Destination
country
Validity
period
Tax
%
Tax code
Departure
country
Customer
tax class.
Material
tax class.
Validity
period
Tax
%
Tax code
Step 1: Export / Intra EU: Reduced
Step 2: Domestic
Departure
country
Destination
country
Customer
tax class.
Material
tax class.
Validity
period
Tax
%
Tax
code
Step 3: Export / Intra EU: Extensive
Departure
country
Destination
country
Customer
tax class.
Material
tax class.
Triang.
indicator
Tax
%
Tax
code
New step: Export / Intra EU: Extensive + Triangulation indicator
Additional: Define a new access sequence step to include the ‘EU Triangular deal’ indicator
11/29/2013 39© 2013 Meridian Global Services. All rights reserved.
40. Case 2
Solution option 1: Manual intervention
The sales order staff in your company are expected to:
be VAT experts in determining the correct rules for each transaction; and
never get it wrong!
Solution option 1 works, but is a high risk solution and therefore
not considered to be a ‘Best Practice’ solution
11/29/2013 40© 2013 Meridian Global Services. All rights reserved.
41. Case 2
Solution option 2: Modify the system - Supply of goods either by affiliated company,
customized on SAP or by a third party supplier/affiliate not on SAP
Implement a combination of tables and logic
In cases where the delivering party is configured as an entity on SAP:
implement logic to detect possible triangular flows
implement tables, that specify the country specific simplification rules
(triangulation as well as Extended reverse charge)
implement logic to, based on the above, set the triangulation indicator in the sales
order in an automated way.
In cases where the delivering party is an external supplier:
implement a special partner role to represent the external supplier.
add this new partner role to each sales order that is being delivered by this
external supplier
add the new partner role into the above logic to correctly determine whether or
not the transaction could be a possible triangular flow
11/29/2013 41© 2013 Meridian Global Services. All rights reserved.
42. Case 2
Solution option 2: Modify the system - Supply of goods either by affiliated company,
customized on SAP or by a third party supplier/affiliate not on SAP
Implement a combination of tables and logic (cont..)
Advantages
Only tables, containing country specific rules, need to be updated. This will only be
the case whenever a country decides to change its legislation
All changes in your business processes (new entities, new logistical routes etc) or
changes in your customer data base (changed ship-to’s, new customers etc) will be
automatically included into the triangulation functionality
Disadvantages
Fairly complex logic to build into SAP
11/29/2013 42© 2013 Meridian Global Services. All rights reserved.
43. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
Introduction to tax determination in SAP
Case 1: Drop shipments
Case 2: Triangulation
Case 3: Customer pickups (EXW deliveries)
Tip: Avoid complexity in condition records
Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 43© 2013 Meridian Global Services. All rights reserved.
44. Case 3 – Customer pick-ups
Specifics around Customer pick-ups, where goods leave the country
To exempt the transaction from VAT because of either an Intra community
supply or an export, you must obtain proof that the goods left the country.
Check which party is performing the customer pick-up. VAT determination for
party ‘B’ or party ‘C’ customer pick-ups is different.
Solution
Option 1: train sales order staff to manually determine the correct VAT
treatment for customer pick-ups
Option 2: teach SAP to recognise customer pick-up transactions
11/29/2013 44© 2013 Meridian Global Services. All rights reserved.
45. Case 3 – Customer pick-ups (A)
Party ‘A’ arranges and pays for the transport
Party ‘A’ can prove that the goods left BE and may thus exempt this transaction as an
Intra Community supply of goods
Consider the following complications….
Customer
Party “B”
VAT Reg in NL
NL
BE10
Party “A”
VAT Reg in BE
BE
Goods
Commercial
invoice
Party ‘A’ arranges and pays for the transport
11/29/2013 45© 2013 Meridian Global Services. All rights reserved.
46. Case 3 – Customer pick-ups (B)
Party ‘B’ arranges and pays for the transport
Party ‘A’ must receive proof from Party ‘B’ that the goods left BE before Party ‘A’ can
exempt this transaction as an indirect dispatch
If no proof is obtained, Party ‘A’ will need to treat this as a domestic transaction in BE
Consider the following (additional) complications….
Customer
Party “B”
VAT Reg in NL
NL
BE10
Party “A”
VAT Reg in BE
BE
Goods
Commercial
invoice
Party ‘B’ arranges and pays for the transport
11/29/2013 46© 2013 Meridian Global Services. All rights reserved.
47. Case 3 – Customer pick-ups (C)
Consider 3 parties in the supply chain:
Party 'B’ applies the triangulation simplification and exempts this transaction from VAT
For details around Triangulation, see Case 2
Consider the following (additional) complications….
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE
BE
Goods
Intercompany
invoice
Commercial
invoice
Party ‘A’ arranges and pays for Transport
11/29/2013 47© 2013 Meridian Global Services. All rights reserved.
48. Case 3 – Customer pick-ups (D)
Party 'C’ arranges and pays for the transport
Party 'A’ (interco. invoice) applies domestic UK VAT, as this becomes “non-moved leg”
Party 'B’ will need to be VAT registered in the UK and can either:
exempt the transaction from VAT as an indirect dispatch (with proof of dispatch, see D1); or
apply domestic UK VAT (see D2)
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE
BE
Goods
Intercompany
invoice
Commercial
invoice
Party ‘C’ arranges and pays for Transport
11/29/2013 48© 2013 Meridian Global Services. All rights reserved.
49. Case 3 – Customer pick-ups (D1)
Party 'A’ (interco. invoice) applies domestic UK VAT, as this becomes “non-moved leg”
Party 'B’ needs to be registered in the UK and can exempt the transaction from VAT as
an indirect dispatch as it obtained proof from ‘Party 'C’’ that the goods left the country.
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE & UK
BE
Goods
Intercompany
invoice
Commercial
invoice
Party ‘C’ arranges and pays for Transport
11/29/2013 49© 2013 Meridian Global Services. All rights reserved.
50. Case 3 – Customer pick-ups (D2)
Party 'A’ (interco. invoice) applies domestic UK VAT, as this becomes “non-moved leg”
Party 'B’ needs to be registered in the UK and needs to perform a domestic transaction if
it did not obtain the proof from Party 'C’ that the goods left the UK.
Party 'C’ would then need to be registered for VAT in the UK and needs to perform a
movement of own goods from UK to NL.
UK01
Party “A”
VAT Reg in UK
Warehouse
Customer
Party “C”
NLUK
BE10
Party “B”
VAT Reg in BE & UK
BE
Goods
Intercompany
invoice
Commercial invoice
Party ‘C’ arranges and pays for Transport
Customer
Party “C”
VAT Reg in NL
11/29/2013 50© 2013 Meridian Global Services. All rights reserved.
51. Case 3 – Customer pick-ups
System implications for the previous flows
11/29/2013 51© 2013 Meridian Global Services. All rights reserved.
52. Case 3 – Customer pick-ups (A)
Standard SAP can correctly determine an Intra Community Supply of goods within this
business flow
Customer
Party “B”
VAT Reg in NL
NL
BE10
Party “A”
VAT Reg in BE
BE
Goods
Commercial
invoice
Party ‘A’ arranges and pays for Transport
11/29/2013 52© 2013 Meridian Global Services. All rights reserved.
53. Case 3 – Customer pick-ups (B)
Standard SAP will always determine an Intra Community flow.
If Party 'A’ cannot obtain proof that the goods have left the country, SAP needs to be
instructed to determine a domestic, BE transaction:
Option 1: Train the CSR to change the destination country in the sales order
Option 2: Teach SAP how to recognize these flows and then automatically change
the destination country by using system-driven logic
Customer
Party “B”
VAT Reg in NL
NL
BE10
Party “A”
VAT Reg in BE
BE
Goods
Commercial
invoice
Party ‘B’ arranges and pays for Transport
11/29/2013 53© 2013 Meridian Global Services. All rights reserved.
54. Case 3 – Customer pick-ups (C)
See the Case 2 (Triangular deal scenarios) for the various solution options
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE
BE
Goods
Intercompany
invoice
Commercial
invoice
Party ‘A’ arranges and pays for Transport
11/29/2013 54© 2013 Meridian Global Services. All rights reserved.
55. Case 3 – Customer pick-ups (D1)
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE & UK
BE
Goods
Intercompany
invoice
Commercial
invoice
Party ‘C’ arranges and pays for Transport
The intercompany invoice
Party 'A’ (interco. invoice) applies domestic UK VAT, as this becomes “non-moved leg”
The destination country for the intercompany invoice needs to be changed to GB
This needs to be system-driven logic, as intercompany invoices are normally created in an
overnight batch process. CSR’s will not be able to influence the VAT treatment for intercompany
invoices
11/29/2013 55© 2013 Meridian Global Services. All rights reserved.
56. Case 3 – Customer pick-ups (D1)
UK01
Party “A”
VAT Reg in UK
Customer
Party “C”
VAT Reg in NL
NLUK
BE10
Party “B”
VAT Reg in BE & UK
BE
Goods
Intercompany
invoice
Commercial
invoice
Party ‘C’ arranges and pays for Transport
The commercial invoice: Party 'B’ obtains proof of transport (indirect dispatch)
Party 'B’ must perform an exempt Intra Community supply of goods, using its UK VAT
registration number!
The departure country for the commercial invoice needs to be changed to GB
Either train the CSR to change the tax departure country in the sales order or implement system
logic to determine a different tax departure country for this flow.
11/29/2013 56© 2013 Meridian Global Services. All rights reserved.
57. Case 3 – Customer pick-ups (D2)
UK01
Party “A”
VAT Reg in UK
Warehouse
Customer
Party “C”
NLUK
BE10
Party “B”
VAT Reg in BE & UK
BE
Goods
Intercompany
invoice
Commercial invoice
Party ‘C’ arranges and pays for Transport
Customer
Party “C”
VAT Reg in NL
The intercompany invoice
Party 'A’ (interco. invoice) applies domestic UK VAT, as this becomes “non-moved leg”
The destination country for the intercompany invoice needs to be changed to GB
This needs to be system-driven logic, as intercompany invoices are normally created in an
overnight batch processes. CSR’s will not be able influence the VAT treatment for intercompany
invoices
11/29/2013 57© 2013 Meridian Global Services. All rights reserved.
58. Case 3 – Customer pick-ups (D2)
UK01
Party “A”
VAT Reg in UK
Warehouse
Customer
Party “C”
NLUK
BE10
Party “B”
VAT Reg in BE & UK
BE
Goods
Intercompany
invoice
Party ‘C’ arranges and pays for Transport
The commercial invoice: Party 'B’ does not obtain proof of transport
Party 'B’ must perform a domestic transaction in the UK , using its UK VAT registration
number!
The departure AND destination country for the commercial invoice needs to be changed to GB
Either train the CSR to change both countries in the sales order or implement system logic to
determine the correct countries for this flow.
Commercial invoice
Customer
Party “C”
VAT Reg in NL
11/29/2013 58© 2013 Meridian Global Services. All rights reserved.
59. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
Introduction to tax determination in SAP
Case 1: Drop shipments
Case 2: Triangulation
Case 3: Customer pickups (EXW deliveries)
Tip: Avoid complexity in condition records
Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 59© 2013 Meridian Global Services. All rights reserved.
60. Case 4 – Commercial invoice
Adding access sequence steps and additional characteristics into condition records:
- Adds undesired complexity into tax condition records
- Multiplies number of tax condition records
- Maintenance and control becomes inefficient and expensive
- Increases risk of incorrect tax treatment on invoices
Dep
cntry
Dest
cntry
Plant Sales
org
Div Distr
chan
Triang.
indic.
Sold-to Ship-to Inco
term
CTC MTC Tax
%
Tax
code
BE NO 1 1 0 A1
BE NO NO01 1 1 25 B2
BE NO BE10 BE10 1 1 21 A7
BE NO NO01 BE10 10 1 1 25 B3
BE NO BE10 BE10 10 01 1 1 21 A7
BE NO UK01 UK01 10 01 190000 190000 1 1 0 X5
BE NO BE10 BE10 10 01 190000 190000 1 1 0 Z8
BE NO UK01 BE10 10 01 190000 290771 1 1 0 Z8
BE NO UK01 BE10 10 01 190000 290771 EXW 1 1 21 1C
Imagine 10,000 records like this, spread over 15 access sequence steps:
TIP: Limit the number of extra characteristics in access sequences. Only expand if absolutely
necessary
11/29/2013 60© 2013 Meridian Global Services. All rights reserved.
61. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
⁞ Introduction to tax determination in SAP
⁞ Case 1: Drop shipments
⁞ Case 2: Triangulation
⁞ Case 3: Customer pickups (EXW deliveries)
⁞ Tip: Avoid complexity in condition records
⁞ Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 61© 2013 Meridian Global Services. All rights reserved.
62. Case 4 – Services
Specifics around Services
Place of supply rules 2010 for (default) services: The ‘tax destination country’ needs to be
“the country of establishment” of your customer
Standard SAP: The tax destination country is the country of your Ship-to
Not all services are default services, and the place of supply varies
Possible solution
Create specific material tax classifications for various services
Modify the system to determine the correct ‘tax destination country’ in case of services
based upon those material tax classifications
Create specific tax codes for services ‘Inside EU’ and ‘Outside EU’
Create specific tax condition records to determine the correct tax codes
11/29/2013 62© 2013 Meridian Global Services. All rights reserved.
63. FR
Sold-to/Payer
‘Cust.Belgium’
BE
Company code
BE10
Plant BE10
Service Machine at a French site of
the Belgian customer
Case 4 – Services
VAT treatment for the above Commercial invoice for VAT:
‘Domestic 21% VAT Belgium’
(because the Belgian customer is established in Belgium)
Invoice
11/29/2013 63© 2013 Meridian Global Services. All rights reserved.
64. Case 5 – Services
Solution: Option 1
Manually change the tax destination country in the sales order
Advantage
No system modification necessary
Disadvantage
Risk and inefficiency: non-tax experts manually manipulating tax treatment
11/29/2013 64© 2013 Meridian Global Services. All rights reserved.
65. Case 4 – Services
Solution: Option 2
Implement the SAP notes as SAP issued on the new place of supply rules
The SAP notes describe 2 possible solutions:
a) modification based upon item category.
b) modification based upon material tax classifications
Advantage
SAP predefined sample coding for the place of supply rules
Disadvantage
Option (a) “item category” – does not use VAT relevant characteristics. SAP
introduces yet another way to determine VAT which adds unnecessary complexity
Option (b) “material tax classification” is a hard coded system modification
11/29/2013 65© 2013 Meridian Global Services. All rights reserved.
66. Case 4 – Services
Solution: Option 3
Implement a more flexible, table-based solution, based on the MTC
Determines the correct destination country based upon the new place of supply
rules
Advantage
The solution can be flexible and can deal with all different kinds of services
Disadvantage
Goods and services still need to be split over multiple invoices
11/29/2013 66© 2013 Meridian Global Services. All rights reserved.
67. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
Introduction to tax determination in SAP
Case 1: Drop shipments
Case 2: Triangulation
Case 3: Customer pickups (EXW deliveries)
Tip: Avoid complexity in condition records
Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 67© 2013 Meridian Global Services. All rights reserved.
68. UK01 is registered for VAT in
country UK
UK01 is registered for VAT in
country BE
Plants Abroad, One Company Code, Foreign VAT Registration
Plants Abroad in SAP
Company code
UK01
Plant BEA1,
Based in Belgium
Plant UK01,
based in the UK
Business requirements
11/29/2013 68© 2013 Meridian Global Services. All rights reserved.
69. Stock movement
Intra company stock movement
Business requirements
Plants Abroad in SAP
Company code
UK01
Plant UK01,
based in the UK
Plant BEA1,
Based in Belgium
11/29/2013 69© 2013 Meridian Global Services. All rights reserved.
70. Why and what does it do?
To be used if you have warehouses or
distribution centres in an EU country, other
then the country of establishment of your
company code
Enables VAT and ECSL reporting for your
foreign VAT registrations
Automates all VAT and Intrastat postings for
Intra-company, cross border transfers of stock
Plants Abroad in SAP
11/29/2013 70© 2013 Meridian Global Services. All rights reserved.
71. After activation of Plants Abroad, you notice the following major
changes in SAP:
A new field is added to the tax code properties, representing the ‘reporting
country’. This reporting country is used within the selection criteria of the VAT
return report and EC Sales list
The programs for running the VAT return report and the EC Sales list are
adapted with the reporting country
The VAT return report is enhanced to report in the correct country specific
currency
Plants Abroad in SAP
11/29/2013 71© 2013 Meridian Global Services. All rights reserved.
72. Plants Abroad in SAP
Cross border – Intra Company Stock Transfers
11/29/2013 72© 2013 Meridian Global Services. All rights reserved.
73. Stock movement
Plants Abroad invoice (WIA): Stock movement from foreign plant to domestic plant
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
Company code
UK01
Plant UK01,
based in the UK
Plant BEA1,
Based in Belgium
UKBelgium
UK01 needs to report VAT and INTRASTAT since this is a cross-border goods flow
To support above flow and above requirements, a ‘dummy’ invoice has to be created.
(Plants Abroad invoice: WIA)
11/29/2013 73© 2013 Meridian Global Services. All rights reserved.
74. Standard price from material master
0% Intra community VAT in BE
100% rebate of the calculated VPRS
Calculation of the INTRASTAT value
Credit posting 20% acquisition tax in GB
Debit posting 20% acquisition tax in GB
Plants Abroad invoice (WIA) pricing procedure
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
11/29/2013 74© 2013 Meridian Global Services. All rights reserved.
75. NOTE: The total sum should always be zero.
No posting in A/R should be made for a dummy invoice, only a G/L posting!
Plants Abroad invoice (WIA) pricing procedure
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
11/29/2013 75© 2013 Meridian Global Services. All rights reserved.
76. Standard price from material master
0% Intra community VAT in BE
100% rebate of the calculated VPRS
Calculation of the INTRASTAT value
Credit posting 20% acquisition tax in GB
Debit posting 20% acquisition tax in GB
Plants Abroad invoice (WIA2): VAT postings
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
11/29/2013 76© 2013 Meridian Global Services. All rights reserved.
77. The condition type WIA2 represents the VAT postings for the intra-Community sale.
In the example, it would determine the condition record below:
Plants Abroad invoice (WIA2): VAT postings
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
11/29/2013 77© 2013 Meridian Global Services. All rights reserved.
78. From the previous tax condition record, tax code
‘XA’ is determined for the output tax from Belgium
Within tax code ‘XA’, reporting country BE
has been set for VAT reporting
Plants Abroad invoice (WIA2) : VAT Postings
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
11/29/2013 78© 2013 Meridian Global Services. All rights reserved.
79. Standard price from material master
0% Intra community VAT in BE
100% rebate of the calculated VPRS
Calculation of the INTRASTAT value
Credit posting 20% acquisition tax in GB
Debit posting 20% acquisition tax in GB
Plants Abroad invoice (WIA1 / WIA3): VAT postings
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
11/29/2013 79© 2013 Meridian Global Services. All rights reserved.
80. Issue:
Within MM / FI we are able to post
acquisition VAT with 1 tax code.
This is also possible within SD if the
condition WIA3 is referenced to
WIA3
Plants Abroad invoice (WIA3, WIA1) : Reference WIA3 to WIA1
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
11/29/2013 80© 2013 Meridian Global Services. All rights reserved.
81. Plants Abroad invoice (WIA3, WIA1) : Reference WIA3 to WIA1
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
Transaction V/06: Change condition type WIA3:
11/29/2013 81© 2013 Meridian Global Services. All rights reserved.
82. The condition type WIA1 and WIA3 represent the Acquisition tax.
In the example we would create below condition record for condition WIA1
Plants Abroad invoice (WIA3, WIA1) : Intra-Community Acquisition VAT Postings
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
The condition type WIA3 doesn’t need to be created as it is referenced to WIA1
11/29/2013 82© 2013 Meridian Global Services. All rights reserved.
83. Tax code GL
Plants Abroad invoice (WIA3, WIA1) : Intra-Community Acquisition VAT Postings
Cross border – Intra Company Stock Transfers
Plants Abroad in SAP
11/29/2013 83© 2013 Meridian Global Services. All rights reserved.
84. Plants Abroad in SAP
Interface Between Sales & Distribution and Finance
11/29/2013 84© 2013 Meridian Global Services. All rights reserved.
85. Interface Between Sales & Distribution and Finance
Plants Abroad in SAP
SAP - SD SAP - FI
INVOICE Accounting
document
The interface
Interface
11/29/2013 85© 2013 Meridian Global Services. All rights reserved.
86. Tax determination in SAP-SD
Plants Abroad in SAP
Stock movement
Company code
UK01
Plant UK01,
based in the UK
Plant BEA1,
Based in Belgium
The delivering plant in the SD module is plant BEA1
The country of this plant is BE
SAP uses this delivering plant to determine the tax departure country
The tax procedure assigned to BE is TAXB
Condition WIA2 (0% Intra community supply from BE to GB) will determine tax code XA. Tax code XA needs
to be configured in tax procedure TAXB
11/29/2013 86© 2013 Meridian Global Services. All rights reserved.
87. Tax determination in SAP-FI
Plants Abroad in SAP
Stock movement
Company code
UK01
Plant UK01,
based in the UK
Plant BEA1,
Based in Belgium
The billing document is transferred via an interface from SAP-SD to SAP-FI
In SAP-FI, the accounting document is generated for the billing document
SAP-FI has no plant information, it only recognizes the company code in which the posting is created
The tax departure country therefore is determined from the company code, not from the plant (like in SD)
The country of the UK01 company code is GB (In SAP-SD this was BE)
The tax procedure assigned to GB is TAXGB (In SAP-SD this was TAXB)
11/29/2013 87© 2013 Meridian Global Services. All rights reserved.
88. Tax determination in SAP-FI
Plants Abroad in SAP
Stock movement
Company code
UK01
Plant UK01,
based in the UK
Plant BEA1,
Based in Belgium
The tax code ‘XA’, determined in SAP-SD now needs to be determined from another tax procedure!
Within SAP-SD, the tax procedure was TAXB, within SAP-FI the tax procedure is TAXGB
Tax code ‘XA’ thus needs to be created in both tax procedures TAXGB as well as TAXB
This leads to double maintenance of tax codes while using Plants Abroad
11/29/2013 88© 2013 Meridian Global Services. All rights reserved.
89. VAT code determination in SD differs from FI, so double maintenance of tax codes.
Example for tax code XA (WIA2 condition, 0% intra community supply from BE)
Interface Between Sales & Distribution and Finance
Plants Abroad in SAP
SD
Tax departure country = country of plant
Country of plant = BE
Tax procedure for country BE = TAXB
For the purpose of tax condition records:
Tax code XA needs to be created in TAXB
Tax (departure) country = country of
company code
Country of company code = GB
Tax procedure for country GB = TAXGB
For the purpose of postings in the G/L:
Tax code XA needs to be created in TAXGB
FI
11/29/2013 89© 2013 Meridian Global Services. All rights reserved.
90. Cause of the issue of double maintenance of tax codes and the solution for avoiding double maintenance
Plants Abroad in SAP
CAUSE
The use of country specific tax procedures (every country uses a separate tax procedure)
Solution
Assign to every (EU) country the same tax procedure (a common tax procedure used by all (EU)
countries, like tax procedure TAXEU)
11/29/2013 90© 2013 Meridian Global Services. All rights reserved.
91. Plants Abroad in SAP
Sales From a Plant Abroad
11/29/2013 91© 2013 Meridian Global Services. All rights reserved.
92. UK BE
Commercial
invoice (F2)
Goods
Since UK01 is registered for VAT in Belgium, the commercial invoice
needs to be created with 0% “extended reverse-charge” VAT in Belgium
Company code
UK01
Customer established
and VAT registered in BE
Plant BEA1
(belongs to cc UK01)
Plants Abroad in SAP
Sales From a Plant Abroad
11/29/2013 92© 2013 Meridian Global Services. All rights reserved.
93. Specifics around Extended reverse Charge rules
If you are a “non-established entity” i.e:=> you are established in country ‘A’, but VAT
registered in member state ‘B’, and/or ‘C’ etc..)
You may be obliged to apply the ‘Extended Reverse Charge’ – depending on the
specific country
This means, that instead of applying local VAT on your taxable supplies, you would not
charge VAT
Your customer (depending on his status) would have to ‘self-assess’ the VAT via the
reverse-charge
You would have a legal requirement to mention this on your sales invoice (billing
document)
Plants Abroad in SAP
Sales From a Plant Abroad
11/29/2013 93© 2013 Meridian Global Services. All rights reserved.
94. Expected result:
Commercial invoice 1: Domestic BE VAT 21 %
Commercial invoice 2: Extended reverse Charge BE 0%
This result can only be reached if the customer tax classification for company code
BE10 differs from the customer tax classification of company code UK01
Commercial
Invoice 1
Company code
UK01
BEUK
Company code
BE10
UK Established / VAT
registered
Plant BEA1
(BE Foreign
Registration of
UK01)
Commercial Invoice 2
Plants Abroad in SAP
Sales From a Plant Abroad
Customer established
and VAT registered in BE
11/29/2013 94© 2013 Meridian Global Services. All rights reserved.
95. Customer master data in SAP is company code independent
and only allows 1 customer tax classification per tax departure country:
Commercial
Invoice 1
Company code
UK01
Customer
registered in BE
BEUK
Company code
BE10
UK Established / VAT
registered
Commercial Invoice 2
Plants Abroad in SAP
Sales From a Plant Abroad
Plant BEA1
(BE Foreign
Registration of
UK01)
11/29/2013 95© 2013 Meridian Global Services. All rights reserved.
96. Solution: Option 1
Manually change the CTC (customer tax classification) in the sales order
Advantage
No system modification necessary
Disadvantage
Risk and inefficiency: non-tax experts manually manipulating tax treatment
Plants Abroad in SAP
Sales From a Plant Abroad
11/29/2013 96© 2013 Meridian Global Services. All rights reserved.
97. Solution: Option 2
Customer number/sales organisation included in access sequence
Advantage
No system modification necessary, only customisation of access sequence steps
Disadvantage
Complexity and risk: condition records become too complex, not best practice
Plants Abroad in SAP
Sales From a Plant Abroad
11/29/2013 97© 2013 Meridian Global Services. All rights reserved.
98. Solution: Option 3
Modification to SAP’s VAT determination logic
Implement the Extended reverse charge rules into the VAT determination
logic, considering the country specific rules
The country specific rules are controlled via tables (flexibility in case rules
change)
Advantage
Completely automated solution for extended reverse-charge rules
Easy to maintain (Only the country specific rules needs to be maintained)
Disadvantage
Complexity modification in high risk user exit
Plants Abroad in SAP
Sales From a Plant Abroad
11/29/2013 98© 2013 Meridian Global Services. All rights reserved.
99. Commercial
Invoice 1
Company code
UK01
Customer
registered in BE
BEUK
Company code
BE10
UK Established / VAT
registered
Commercial Invoice 2
Business case in SAP
Plants Abroad in SAP
Sales From a Plant Abroad
Plant BEA1
(BE Foreign
Registration of
UK01)
11/29/2013 99© 2013 Meridian Global Services. All rights reserved.
100. Plants Abroad in SAP
Sales From a Plant Abroad: Commercial invoice 1 – Header / VAT ID
11/29/2013 100© 2013 Meridian Global Services. All rights reserved.
101. Plants Abroad in SAP
Sales From a Plant Abroad: Commercial invoice 1: Pricing analysis
11/29/2013 101© 2013 Meridian Global Services. All rights reserved.
102. Plants Abroad in SAP
Sales From a Plant Abroad: Commercial invoice 1: tax condition record
11/29/2013 102© 2013 Meridian Global Services. All rights reserved.
Condition record selected
Characteristics are correct
103. Plants Abroad in SAP
Sales From a Plant Abroad: Commercial invoice 2 – Header / VAT ID
11/29/2013 103© 2013 Meridian Global Services. All rights reserved.
104. Plants Abroad in SAP
Sales From a Plant Abroad: Commercial invoice 2: Pricing analysis
11/29/2013 104© 2013 Meridian Global Services. All rights reserved.
Dynamic change of CTC to “V”
Drives different VAT treatment
105. Plants Abroad in SAP
Sales From a Plant Abroad: Commercial invoice 1: tax condition record
11/29/2013 105© 2013 Meridian Global Services. All rights reserved.
Condition record selected
Tax departure country is correct
Special CTC of “V” drives tax decision for Extended
Reverse Charge
Correct tax code BF determined
106. Plants Abroad in SAP
VAT Return Reports and EC Sales Lists
11/29/2013 106© 2013 Meridian Global Services. All rights reserved.
107. To facilitate the selection of multiple
countries for 1 Company Code , SAP
has extended the VAT report
Properties tax code XA
Using the reporting country in reporting
Plants Abroad in SAP
Monthly VAT reporting and Plants Abroad
11/29/2013 107© 2013 Meridian Global Services. All rights reserved.
108. Company code UK01
Plant UK01
Plant BEA1
Plant PLA1
Plant SEA1
VAT report for the UK Tax authorities
VAT report for the Polish Tax authorities
VAT report for the Belgium Tax authorities
VAT report for the Swedish Tax authorities
In GBP !
In PLN !
In SEK !
Using the daily average
rate of the European
Central Bank
Using the monthly
average rate of the
European Central Bank
All postings done in
UK01 are in GBP, so we
have to convert the
amounts
In EUR !
Example Monthly Reporting for UK01
Plants Abroad in SAP
Monthly VAT reporting and Plants Abroad
109. To facilitate the conversions to
country currencies, SAP has
extended the VAT report:
NOTE: Plants Abroad creates
possibilities to manage these
currencies correctly
Managing different reporting currencies
Plants Abroad in SAP
Monthly VAT reporting and Plants Abroad
11/29/2013 109© 2013 Meridian Global Services. All rights reserved.
110. To facilitate the reporting per
country in which the company is
VAT registered, SAP has
extended report RFASLM00
transaction S_ALR_87012400:
Quarterly VAT reporting: EC sales list and Plants Abroad
Plants Abroad in SAP
Monthly VAT reporting and Plants Abroad
11/29/2013 110© 2013 Meridian Global Services. All rights reserved.
111. Agenda
Part 1 : 10h45 – 11h30
How to automate typical, complex VAT flows in SAP
Introduction to tax determination in SAP
Case 1: Drop shipments
Case 2: Triangulation
Case 3: Customer pickups (EXW deliveries)
Tip: Avoid complexity in condition records
Case 4: Services
Part 2 : 11h35 – 12h20
Plants Abroad – a step by step implementation guide
Automating VAT determination on AP invoices (PO’s and IDOCs)
11/29/2013 111© 2013 Meridian Global Services. All rights reserved.
112. Tax code determination in purchase orders
• Option 1: Tax code is set in purchase order
• Option 2: Tax code is determined via condition record technique in PO
• Option 3: No tax code in purchase order
VAT determination in Purchase orders
11/29/2013 112© 2013 Meridian Global Services. All rights reserved.
113. Option 1: Tax code is set in purchase order
• Manual VAT determination by purchase staff
• No automation necessary in SAP
11/29/2013 113© 2013 Meridian Global Services. All rights reserved.
VAT determination in Purchase orders
114. Option 2: Tax code is determined via condition record technique in PO
• No manual VAT determination by purchase staff
• Automation in SAP, using condition record technique, similar to Sales transactions
11/29/2013 114© 2013 Meridian Global Services. All rights reserved.
VAT determination in Purchase orders
115. Issues:
a) Destination country in purchase orders
destination country in the PO “import data” is used within the tax condition records
within the “import data” screens of a PO line item, the country of destination is
determined based on the country of the receiving plant.
The receiving plant is not necessarily the destination country.
b) Departure country in purchase orders
the departure country as used within the tax condition records is retrieved from the
dispatch country within the import tab.
if the purchase order contains a partner role ‘GS’ (Goods supplier), the country of the
goods supplier is determined as departure country.
if there is no Goods supplier, the country of the vendor is used as departure country
11/29/2013 115© 2013 Meridian Global Services. All rights reserved.
VAT determination in Purchase orders
116. Issues:
c) Import Indicator
SAP uses a so called import indicator within the condition record technique.
This indicator represents either:
– ‘0’ No import (domestic)
– ‘1’ Import from outside EU
– ‘2’ Import within EU
As the destination country and the departure country are doubtful, the import indicator
cannot be used
d) Missing EU rules
Within the condition record technique, no logic is available for:
– domestic reverse charge, EU triangular deals, s
– special regions within the EU
– Etc.
11/29/2013 116© 2013 Meridian Global Services. All rights reserved.
VAT determination in Purchase orders
117. Option 3: No tax code is set in purchase order
Tax code is determined via:
manual during invoice receipt
automated via EDI – IDOC processing
11/29/2013 117© 2013 Meridian Global Services. All rights reserved.
VAT determination in Purchase orders
119. The tax code for incoming electronic/EDI invoices can be determined via:
table T076M (transaction OBCD)
the purchase order
Table T076M contains
the partner type
the vendor number
the (vendor) tax code as stated in the electronic/EDI invoice,
the (vendor) tax percentage as stated in the electronic/EDI invoice,
the destination country
Based on above parameters, the tax code for the AP invoice posting is determined IF no tax code is
stated on the purchase order
VAT determination: EDI processing
11/29/2013 119© 2013 Meridian Global Services. All rights reserved.
120. Question 1: Which VAT registration number will this vendor use?
FR
Company code FR10
BE
Belgian Vendor
209000
EDI - AP
Invoice
Warehouse BE
Vendor is registered
in BE, but also
registered in FR
Answer: Could be the BE VAT registration number or the FR VAT registration number?
(a) VAT treatment where BE VAT ID is used: Intra-EU acquisition: +/- 19.6% , self assessed
(b) VAT treatment where FR VAT ID is used: Extended reverse-charge: +/- 19.6%, self-assessed
(a) requires separate disclosure in boxes 03, 08, 20 and 17 of FR VAT return
(b) requires separate disclosure in boxes 3B, 08, 20 of FR VAT return
11/29/2013 120© 2013 Meridian Global Services. All rights reserved.
VAT determination: EDI processing
121. Partner
type
Partner
number
Tax
type
Tax rate Destination
country
Tax code
LI 209000 VAT 0.000 (%) FR QUESTION 2:
Intra community acquisition?
OR
Extended reverse charge?
Standard SAP VAT determination for EDI invoices (via OBCD)
In both cases, a reverse-charge posting needs to be created (debit/credit posting) – but it will need to be
a different tax code as this requires different disclosure in the VAT returns
Question 4: Is it goods or services?
(a) VAT treatment where BE VAT ID is used: Intra-EU acquisition: +/- 19.6% , self assessed
(b) VAT treatment where FR VAT ID is used: Extended reverse-charge: +/- 19.6%, self-assessed
Question 3: Which percentage needs to be used:
- Standard rate? or
- reduced rate? or
- super reduced rate?
11/29/2013 121© 2013 Meridian Global Services. All rights reserved.
VAT determination: EDI processing
122. ISSUES
• Missing EU rules
Extended reverse charge
EU triangular deals
Special regions within the EU
Etc.
No material tax classification available
No plant tax classification available
No departure country available
Incorrect determination of destination country
Etc.
11/29/2013 122© 2013 Meridian Global Services. All rights reserved.
VAT determination: EDI processing
123. Solution
• Build an extended ‘OBCD’ functionality which contains:
Logic to determine the various EU VAT rules
Determination of material tax classifications
Determination of the correct departure country
Determination of the correct destination country
etc.
11/29/2013 123© 2013 Meridian Global Services. All rights reserved.
VAT determination: EDI processing
124. 11/29/2013 124© 2013 Meridian Global Services. All rights reserved.
Further information
Roger Lindelauf
e-mail: roger.lindelauf@meridianglobalservices.com
phone: +44.208.601.4600
Ryan Ostilly
e-mail: ryan.ostilly@meridianglobalservices.com
phone: +44.208.601.4600
Join VAT for SAP on
www.meridianglobalservices.com
125. Disclaimer
The information contained within this presentation is and shall remain the property of Meridian Global Services and its subsidiary and associate companies. This presentation is
supplied in strict confidence and must not be re-produced in whole or in part, used in tendering or for other purposes or given or communicated to any third party without
the prior written consent of Meridian
END