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 New EU Sales Tax Regulation

 

As of January 1, 2015, in the European Union, services in the areas of telecommunications, radio, television, and electronically-provided services must be taxed in the country of the recipient of the services. Contract Accounts Receivable and Payable provides functions for meeting this requirement.

Technical Details

Technical Name of Product Feature

Not relevant

Product Feature Is

New

Country Dependency

Valid for the European Union

Software Component Version

FI-CAX 617

Application Component

IS-UT (Generic Contract Accounts Receivable and Payable)

Available As Of

SAP Enhancement Package 7 for SAP ERP 6.0, SP06

Prerequisite Business Function

None

Additional Information

According to European Union laws, EU companies must adhere to the following rules when providing services in another EU country:

  • Do not debit business customers for VAT

  • Charge private customers the VAT of the EU country in which the services were received (destination country)

Example Example

You are a German company delivering goods or services to business customers in France.

The following account assignment data that is relevant to the transaction is entered in posting area S001:

  • Company code (DE): 0001

  • Main and subtransaction: xxxx xxxx

  • Tax determination code: A1 (19% VAT in Germany)

For services provided in France, you maintain posting area 2014 as follows:

  • Tax determination code: A1

  • Destination country: FR

  • Alternative tax determination code B2C: F1 (20% VAT in France)

  • Alternative tax determination code B2B: AX (0% VAT with EU Code 4)

The system determines the alternative tax determination code. As a result, business customers are not charged any VAT, and private customers are charged 20% VAT.

End of the example.

Effects on Customizing

For the country of each company code, define a tax on sales/purchases code for all tax rates. In doing so. also take into account additional tax codes for deliveries abroad.

Maintain the company code for transaction-relevant account assignments and enter a tax determination code there.

Enter an alternative tax determination code for deliveries abroad in Customizing for Contract Accounts Receivable and Payable under Start of the navigation path Basic Functions Next navigation step Postings and Documents Next navigation step Document Next navigation step Maintain Document Assignments Next navigation step Enter Alternative Tax Determination Code End of the navigation path (posting area 2104).