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 New EU Sales Tax Regulation

 

As of January,1st 2015, telecommunications, radio, television and electronic services are to be taxed in the European Union in the country of the service recipient. Contract Accounts Receivable and Payable provides functions for implementing this regulation.

Technical Details

Technical Name of Product Feature

MED_CONTIMP_CA_SP06

Product Feature Is

New

Country Dependency

Valid for all countries

Software Component Version

IS-M 6.17

Application Component

IS-M (Start of the navigation path Contract Accounts Receivable and Payable End of the navigation path)

Available As Of

SAP Enhancement Package 7 for SAP ERP 6.0, SP06

Required Business Function

None

Additional Information

According to legislation, EU companies must observe the following when performing services in another EU country:

  • Not charge commercial customers VAT.

  • Charge private customers the VAT for the EU country in which they receive the service (country supplied).

Example Example

You are supplying a commercial customer in France.

The following transaction-relevant data has been recorded in the posting area S001:

  • Posting area (DE): 0001

  • Main and subtransaction: xxxx xxxx

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

You maintain posting area 2014 as follows for services performed in France:

  • Tax determination code: A1

  • Country supplied: FR

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

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

The system determines the alternative tax determination codes. This results in commercial customers not being charged VAT and private customers being charged 20% VAT.

End of the example.

Effects on Customizing

Define a sales tax code for all tax records for the country for a company code. Observe any additional tax indicators for deliveries to another country.

Maintain the posting area for transaction-relevant account assignments and record a tax determination code here.

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) enter an alternative determination code for deliveries to another country.