config Vat non-vat

1. Value Added Tax - Two-Thirds Rule Page 1 of 4
Value Added Tax - Two-Thirds Rule
Two-Thirds Rule
"Where the provision of a service also involves the supply of goods or, alternatively, the supply of goods also
involves the supply of a service, the rate of VAT applicable to the service can be used provided that the value
of the goods does not exceed two-thirds of the total charge.
The rule has particular relevance to repair services and installation of fixtures in buildings."
Example of Irish VAT Calculation
Tax rates:
Tax on Material: 21%
Tax on Service : 12.5%
Value of material value is less than two-thirds of the total:
Service 2hrs 40.00
Material 1pc 50.00
Total 90.00
Tax on Service @ 12.5% = 5.00
Tax on Material @ 12.5% = 6.26
Value of material is greater / equal than two-thirds of the total:
Service 1hr 20.00
Material 1pc 50.00
Total 70.00
Tax on Service @ 21% = 4.20
Tax on Material @ 21% = 10.50
Possible Solution
Customizing
We recommend the following customizing:
Tax codes:
Output Tax A0: 0 %
Output Tax A1: 12.5 %
Output Tax A2: 21 %
Customer Taxes
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2. Value Added Tax - Two-Thirds Rule Page 2 of 4
MWST Output Tax 0 Tax Exempt
MWST Output Tax 1 Liable for Taxes
MWST Output Tax 3 Low tax rate **
MWST Output Tax 4 High tax rate **
Material Taxes
MWST Output Tax 0 No tax
MWST Output Tax 1 Full tax
MWST Output Tax 2 Half tax**
MWST Output Tax 3 Low tax rate**
** specific for the "Two-Thirds" Rule
Master data
Material / service master data Type Tax indicator
Material 1
Service DIEN 3
Output Tax condition
Tax customer Tax material Tax rate Tax code
0 Tax Exempt 0 No tax 0% A0
1 Liable for Taxes 1 Full tax 21% A2
1 Liable for Taxes 3 Low tax rate 12.5% A1
3 Low tax rate 1 Full tax 12.5% A1
3 Low tax rate 3 Low tax rate 12.5% A1
4 High tax rate 1 Full tax 21.5% A2
4 High tax rate 3 Low tax rate 21.5% A2
User Exit
The following coding could be used as a template.
Please, be aware that manual changes of the customer class taxk1 except changes to tax exempt in
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3. Value Added Tax - Two-Thirds Rule Page 3 of 4
the sales order will no influence the recalculation of the tax.
You should not use the function invoice split together with the Two-Third Rule. Also you could avoid
invoice split by defining service deliverable.
Object name : MV45AFZZ
form userexit_save_document_prepare.
data: goods like vbap-netwr,
servs like vbap-netwr.
clear: goods, servs.
* Check to see if Irish VAT rules need to be applied
* It could be possible, that you have to check also the company code
* If so, then carry out new pricing with pricing type 'G' which will
* only change taxes
if t001-land1 eq 'IE ' and
kuagv-land1 eq 'IE '.
* IF customer is exempt, exit routine
check vbak-taxk1 ne '0'.
* Loop through items adding up the net values of goods and services
* Goods have material tax category 1, services 3
loop at xvbap.
if xvbap-taxm1 = '1'.
goods = goods + xvbap-netwr.
elseif xvbap-taxm1 = '3'.
servs = servs + xvbap-netwr.
endif.
endloop.
* See if goods is > 2/3 of the invoice.
goods = goods / 2.
if goods > servs.
* Set the customer tax classification to 4 (high) and reprice the order
perform vbak_bearbeiten_vorbereiten(sapfv45k).
vbak-taxk1 = '4'.
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4. Value Added Tax - Two-Thirds Rule Page 4 of 4
perform vbak_bearbeiten(sapfv45k).
perform preisfindung_gesamt using charg.
else.
* Set the customer tax classification to 3 (low) and reprice the order
perform vbak_bearbeiten_vorbereiten(sapfv45k).
vbak-taxk1 = '3'.
perform vbak_bearbeiten(sapfv45k).
perform preisfindung_gesamt using charg.
endif.
endif.
endform.
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