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 Postings with Extended Withholding Tax

Use

You can post conditions with withholding taxusing RE posting processes. You can use this function, for example, in Germany, to deal with construction withholding tax.

Example Example

When a real estate manager, who is authorized to deduct withholding tax, pays invoices from a construction vendor subject to withholding tax, the real estate manager reduces the payment amount by the amount of withholding tax. The real estate manager then pays the tax withheld directly to the appropriate tax authorities.

End of the example.

Conditions with withholding tax data can be processed in these processes:

  • Periodic posting

  • One-time postings

  • Service charge settlement

  • Sales-based rent settlement

    Note Note

    For more information on withholding tax in Financial Accounting, see Withholding Tax .

    End of the note.

Prerequisites

Customizing

This is a general function of Financial Accounting (FI). To make postings with extended withholding tax, you have to have made the following settings in Customizing for Financial Accounting :

  • You activated extended withholding tax in your company code. In Customizing for Start of the navigation path Financial Accounting (New) Next navigation step Financial Accounting Global Settings (New) Next navigation step Withholding Tax Next navigation step Extended Withholding Tax Next navigation step Company Code Next navigation step Activate Extended Withholding Tax. End of the navigation path

  • In the country of the company code, you created withholding tax typesand the necessary withholding tax codes. The withholding tax type describes the type of withholding tax and the time of posting. The withholding tax code contains the tax rate. You need types that are related to payment (withholding tax is not due until payment is made) and types relevant to invoices (withholding tax is already due when the invoice is received).

    Choose Start of the navigation path Financial Accounting (New) Next navigation step Financial Accounting Global Settings (New) Next navigation step Withholding Tax Next navigation step Extended Withholding Tax Next navigation step Calculation Next navigation step Withholding Tax Type End of the navigation path or Withholding Tax Code.

  • Assign the withholding tax types to the company code.

    Choose Start of the navigation path Financial Accounting (New) Next navigation step Financial Accounting Global Settings (New) Next navigation step Withholding Tax Next navigation step Extended Withholding Tax Next navigation step Company Code Next navigation step Assign Withholding Tax Types to Company Codes. End of the navigation path

    Master Data

  • You entered the data for withholding tax in the vendor and customer master data.

  • You have vendor and customer real estate contracts in the company code, in which extended withholding tax is activated. The real estate contracts have withholding tax terms.

Features

If you make these settings, then the system generates the following data:

  • When you post invoices, the system generates withholding tax lines.

  • When you post payments , the information for withholding tax is transferred in the document, from which the withholding tax is posted.

The system also checks if all required withholding tax types from the master data, which are relevant for payment, are in the line item.

Limitations

If you made settings for a payment-relevant withholding tax type in Customizing, then the withholding tax is only posted during payment-relevant processes, but not during processes that are for clearing only. Withholding tax is not posted for installment payments . This means that, in the RE-FX component, it is not possible to arrange for installment payments for an item with withholding tax.

During service charge settlement, only advance payments posted as revenue are considered for the conditions relevant for service charges. The system does not support special general ledger processes with withholding tax. The standard withholding tax term is used during service charge settlement. You can use a different withholding tax term that comes from conditions (advance payment condition of settlement participation) only in the Balance + Actual Advance Payments settlement schema.

Activities

To create a withholding tax term in customer or vendor real estate contracts, follow the procedure described in Create Withholding Tax Term .

If you performed periodic posting for the contracts, and then post the incoming payment, the system automatically generates withholding tax lines.

If you make one-time postings , then you can enter the withholding tax data directly on a separate tab page.

Example

Example for a document with 10% withholding tax (without tax on sales/purchases):

  • Posting related to invoice (vendor invoice only)

    The amount paid to the vendor is already reduced:

    P.key

    Account

    Amount

    31

    Vendor

    12,600 -

    40

    Costs

    14,000

    50

    Withholding tax

    1,400 – (transferred to tax office)

    The payment is equal to the amount owed to the vendor:

    P.key

    Account

    Amount

    50

    Bank

    12,600 -

    21

    Vendor

    12,600

  • Posting relevant to payment (customer or vendor)

    The system posts the full payable and the document contains the withholding tax information:

    P.key

    Account

    Amount

    31

    Vendor

    14,000 -

    40

    Costs

    14,000

    The withholding tax is not calculated and posted until the payment is posted.

    P.key

    Account

    Amount

    50

    Bank

    12,600 -

    21

    Vendor

    14,000

    50

    Withholding tax

    1,400 – (transferred to tax office)