Tax determination and chain transactions

Description

In the standard system, tax is determined using condition MWST and access sequence MWST. The following key is used for accessing:

1. Access: Departure country / Destination country
2. Access: Departure country / Tax class. customer / Tax class. material (domestic delivery)
3. Access: Departure country / destination country / Tax class. customer / Tax class. material (export)

The departure country is the country of the delivering plant. The destination country is the country of the ship-to party. The tax classification is copied from the master data of the partner functions (to find out about which partner functions the data is taken from, see 'Determining the VAT ID number'). The tax classification of the material is copied from the material master.

The access options for a suitable condition record have been extended as follows:

1. Change tax country of departure manually in the order header
2. If this field is set, it replaces the departure country in the accesses above with a condition record for MWST.

CAUTION: The 'Tax classification material' fields are NOT read with the tax departure country, it is still read with the original departure country !!!

1. Change tax destination country manually in the order header

If this field is set, it replaces the destination country in the accesses above with a condition record for MWST.

CAUTION: The 'Tax classification customer' and the VAT ID number of the payer and sold-to party (not the ship-to party) are also read with the tax destination country !!!

1. Requirements for tax determination

The standard requirements 08 and 07 for the 2nd and 3rd access to MWST are been extended.

This means that a transaction within the EU is calculated as a domestic delivery if the partner does not have a VAT registration number.

1. Set EU triangular indicator manually in the order header

Marks a transaction as 'relevant for EU triangular business simplification guidelines'. The indicator is forwarded to FI. It is relevant in FI for the EC sales list and the advance return for tax on sales/purchases.

1. Determining the VAT ID number

The partner function from which the VAT ID number is determined, used to be predefined. This can now be configured in Customizing. Customer tax classification determination is also linked to this. The setting is carried out per sales organization, using the 'tax rule' indicator.

Where the setting is BLANK, the following standard priority rules apply:

a) If PY has a VAT ID no. and PY <> SP, then tax number and tax classification are taken from PY (SH is no longer relevant in this case).
The tax number is taken according to the 'tax destination country'.
b) If a) does not apply:
If SH has a VAT reg. no. or if SP has NO VAT reg. no., then the tax number and tax classification are taken from SH.
c) If b) also does not apply:
Tax number and tax classification are copied from the sold-to party. The tax number is taken according to the country of the sold-to party.

For setting 'A', the tax number and the tax classification are generally copied from the sold-to party.
The tax number is taken according to the 'tax departure country'.

For setting 'B' the tax number and the tax classification are generally copied from the payer.
The tax number is taken according to the 'tax destination country'.

Change system parameters in customizing

"Maintain sales tax-identification number determination".

Changes to the interface

1. Change tax country of departure manually in the order header
2. Change tax country of destination manually in the order header
3. Set EU triangular indicator manually in the order header

Further notes

When changing the tax country of departure, you must make sure that the tax indicator for the tax determination procedure of the company code country is the same as the tax indicator for the tax determination procedure of the tax country of destination. This is because the system uses the company code country in FI to look for the relevant tax record. You must maintain the 'reporting country' in the characteristics of the tax indicator.

Example: If the tax country of departure is set at 'FR' and the company code country at 'DE' with tax determination procedures 'TAXFR' for country 'FR' and 'TAXD' for country 'DE'.

Condition record MWST
Departure country: FR
Destination country: ..
...
Tax indicator: A1 (from TAXFR, as departure country = FR)
Rate: 21 %

When forwarding to FI, 'TAXFR' is not accessed, rather 'TAXD', because 'DE' is the company code country. This means that tax indicator A1 in tax determination procedure 'TAXD' must agree with tax indicator A1 in tax procedure 'TAXFR'. Reporting country 'FR' must be maintained for A1 in 'TAXD'.

See also the FI release note:

FI - Taxes on sales/purchases: Plants abroad