https://help.sap.com/docs/SUPPORT_CONTENT/fiaccounting/3361881594.

html

https://help.sap.com/docs/SUPPORT_CONTENT/fiaccounting/3361878199.html

Please check standard transaction S_ALR_87012179 (Customer List) by

selecting 'Tax Info. and References'.

https://www.linkedin.com/pulse/decoding-determination-vat-registration-number-sap-samik-raha-pmp-

https://www.tcodesearch.com/sap-fms/EU_TAX_NUMBER_CHECK

How to automate typical, complex VAT flows in SAP

 Introduction to tax determination in SAP

 Case 1: Drop shipments.
 Case 2: Triangulation
 Case 3: Customer pickups (EXW deliveries)
 Tip: Avoid complexity in condition records
 Case 4: Services

 Plants Abroad – a step by step implementation guide

 Automating VAT determination on AP invoices (PO’s and IDOCs)

– EU VAT rules and disclosure requirements have changed significantly and regularly

– Businesses have become more international

– Migration to common ERP platforms and standards

– Supply-chain and corporate restructuring is common practice

– Greater focus on indirect tax compliance

Standard SAP: Output VAT determination

Drop shipment from the UK and an onward domestic sale within Belgium.
Invoice Header / VAT ID
Condition Analysis

Selected Tax Condition Record

Case 2 – Triangulation

Specifics around Triangulation and (external) party suppliers

 Country specific rules: is triangulation allowed in all cases?

 If the entity (either affiliate or external party) that delivers the goods is not configured on your SAP
system, the ‘departure country’ in not known during the sales order process / billing process.

Solution

 Option 1: train sales order staff to manually determine ‘Triangulation’.

 Option 2: teach SAP to recognise triangulation deals and the corresponding country specific rules
Solution option 1: Manual intervention

 Sales order staff or sales engineers are responsible for setting up sales orders in SAP.

 In order to apply the correct VAT rules in standard SAP, train the Sales engineers to recognise
possible ‘Triangular deals’ and train them to apply all various country specific rules.

 If they still can remember and correctly apply all relevant rules, train the Sales engineers to
manually check the box ‘EU triangular deal’ within the sales order.
Advantages

 Only tables, containing country specific rules, need to be updated. This will only be the case
whenever a country decides to change its legislation.

 All changes in your business processes (new entities, new logistical routes etc) or changes in your
customer data base (changed ship-to’s, new customers etc) will be automatically included into the
triangulation functionality.

Disadvantages

Fairly complex logic to build into SAP

Case 3 – Customer pick-ups

Specifics around Customer pick-ups, where goods leave the country.

To exempt the transaction from VAT because of either an Intra community supply or an export, you
must obtain proof that the goods left the country.

 Check which party is performing the customer pick-up. VAT determination for party ‘B’ or party ‘C’
customer pick-ups is different.

Solution

Option 1: train sales order staff to manually determine the correct VAT treatment for customer pick-
up.

Option 2: teach SAP to recognise customer pick-up transactions.

Customer pick-ups (A)

System implications for the Customer pick-ups (A)

Customer pick-ups (B)

– System implications for the flow Customer pick-ups (B)

Customer pick-ups (C)

– System implications for the flow

Customer pick-ups (D)

– System implications for the flow

Customer pick-ups (D1)

– System implications for the flow
– Customer pick-ups (D2)

– System implications for the flow

Case 4 Commercial Invoice

Adding access sequence steps and additional characteristics into condition records:

- Adds undesired complexity into tax condition records

- Multiplies number of tax condition records

- Maintenance and control become inefficient and expensive

- Increases risk of incorrect tax treatment on invoices

Services

Specifics around Services

 Place of supply rules 2010 for (default) services: The ‘tax destination country’ needs to be “the
country of establishment” of your customer.

 Standard SAP: The tax destination country is the country of your Ship-to

 Not all services are default services, and the place of supply varies.

Possible solution

 Create specific material tax classifications for various services.

 Modify the system to determine the correct ‘tax destination country’ in case of services based
upon those material tax classifications.

 Create specific tax codes for services ‘Inside EU’ and ‘Outside EU’.

 Create specific tax condition records to determine the correct tax codes.
Plants Abroad in SAP
Cross border – Intra Company Stock Transfers
Cause of the issue of double maintenance of tax codes and the solution for avoiding double
maintenance

CAUSE

 The use of country specific tax procedures (every country uses a separate tax procedure)

Solution

 Assign to every (EU) country the same tax procedure (a common tax procedure used by all (EU)
countries, like tax procedure TAXEU)

Sales From a Plant Abroad

Specifics around Extended reverse Charge rules

 If you are a “non-established entity” i.e:=> you are established in country ‘A’, but VAT registered in
member state ‘B’, and/or ‘C’ etc..)

 You may be obliged to apply the ‘Extended Reverse Charge’ – depending on the specific country

 This means, that instead of applying local VAT on your taxable supplies, you would not charge VAT
 Your customer (depending on his status) would have to ‘self-assess’ the VAT via the reverse-charge
 You would have a legal requirement to mention this on your sales invoice (billing document)
Solution: Option 1

 Manually change the CTC (customer tax classification) in the sales order

Advantage

 No system modification necessary

Disadvantage

 Risk and inefficiency: non-tax experts manually manipulating tax treatment.

Solution: Option 2

 Customer number/sales organisation included in access sequence Advantage.

 No system modification necessary, only customisation of access sequence steps Disadvantage

 Complexity and risk: condition records become too complex, not best practice.

Solution: Option 3

Modification to SAP’s VAT determination logic

Implement the Extended reverse charge rules into the VAT determination logic, considering the
country specific rules

The country specific rules are controlled via tables (flexibility in case rules change)

Advantage

 Completely automated solution for extended reverse-charge rules

 Easy to maintain (Only the country specific rules needs to be maintained)

Disadvantage

 Complexity modification in high risk user exit

Sales From a Plant Abroad: Commercial invoice 1 – Header / VAT ID
Pricing analysis

tax condition record

Commercial invoice 2 – Header / VAT ID

Pricing analysis
tax condition record

Monthly VAT reporting and Plants Abroad

Using the reporting country in reporting

Quarterly VAT reporting: EC sales list and Plants Abroad
VAT determination: EDI processing

The tax code for incoming electronic/EDI invoices can be determined via:

 table T076M (transaction OBCD)

 the purchase order

Table T076M contains

 the partner type

 the vendor number

 the (vendor) tax code as stated in the electronic/EDI invoice,

 the (vendor) tax percentage as stated in the electronic/EDI invoice,

 the destination country

Based on above parameters, the tax code for the AP invoice posting is determined IF no tax code is
stated on the purchase order
You have your selling entity in Italy, customer in Spain and goods are being
shipped from a supplier or your own associate company in Slovenia. From an
EU Tax perspective, all the three are different entities under different VAT
Numbers, even though Slovenia is your own associate or same entity with a
different VAT No.

Your confusion is on how to determine active or inactive delivery, since that

also applies what tax rate should be applied in the transaction. In your case,
you have to first check, if the supplier in Slovenia is transporting the goods to
customer in Spain or the selling entity is responsible for transport or the
customer is picking the goods from plant in Slovenia, which would be a kind of
ex works.

Assume that the transport responsible is Slovenia VAT No and the goods are
transported from Slovenia to Spain, than this would be considered as active
delivery. These would be taxable event in EU Cross Border though at a zero
rate or a reverse charge tax code.

However, if the responsibility for transport is with selling entity in Italy, than
there are two active deliveries. The entity in Italy should register for VAT in
Slovenia and the final invoice to customer should have zero tax or reverse
charge tax code (Supplier - Selling entity should have VAT Reg No of
Slovenia). However, the invoice from Slovenia to selling entity in Italy with a
VAT registration in Slovenia would have a normal VAT Tax Code supplied as it
is related to supplies within Slovenia.
Hope this should help you understand the concept as well as understand how
tax code determination should work for triangular deals within EU

Triangulation deals is a trade done between three parties which all are
representatives of different EU countries.

We need to define the new access sequece for the EU triangular deals. For
e.g. origin Country, Destination Country, TaxClassification for customer , Tax
classification for materail , EU triangular deal. please check this solution
Have a look at OSS notes 893495 and 1897138

Please help me set-up the EU triangulation deal for one of my EU client.

As per client's definition of EU triangulation:

Triangulation refers to a any situation where goods move form EU country to

another and a third party in the transaction is based elsewhere (either in or
out of the EU)

Therefore another current example we have, the goods are going to France,
but we are invoicing Japan, the Japanese customer has a French VAT
registration recorded in SAP Master Data.

Therefore this is also an EU triangulation sale.

My question to you:

I can see there is a check box in SO header -> billing for "EU Trian Deal".

If we check this box manually, client is satisfied as they get this in intrastat
report (VE01).

The VAT tax calculation and all is OK.

The requirement is to make this check box "EU Trian Deal" automatically in
case of EU triangulation deal.

Any idea, if this can be done with standard SAP?

 ote 66405 - Indicator for EU triangular deal

wherein, it has been mentioned

you create a data transport routine (Transaction VOFM) which contains this
procedure. In Customizing under 'Copying control for billing documents',
assign the data transport routine to the corresponding item categories.

At the moment, I can see, there is a check box in SO header -> Billings for "EU Triang Deal".
If we check this box manually, it is getting copied to billing document as well.

My requirement is how to make this auto-check in the box for EU triangulation deal.

Client wants, system to auto-determine, if SO belongs to EU Triangulation deal or normal SO.

Triangulation refers to a any situation where goods move form EU country to another and a third party in the transaction is
based elsewhere (either in or out of the EU)

Therefore another current example we have, the goods are going to France, but we are invoicing Japan, the Japanese
customer has a French VAT registration recorded in SAP Master Data.

Therefore this is also an EU triangulation sale.

Let me try to explain one by one.

Let us take an example of an European Automobile Manufacturer in Germany,

with legal entities (Subsidiaries) in India, Brazil, Poland, China, Spain and
Japan with offcourse, HQ being in Germany.

Now if the German HQ with a plant in Berlin is buying engine parts from it's
subsidiary plant in India, it is a sale purchase transaction between two
entities of the same group and hence it would be called as an intercompany
transaction. However, if a car is being manufactured in India & German HQ
orders the car to be delivered to end dealer in China from the subsidiary with
it's plant in India, this would be a drop shipment scenario with the entrie
transaction being an intercompany transaction.

In a nutshell, a drop shipment can be an intercompany transaction as well at

the same time, when all the three parties are from the same group and vice
versa. If the same transaction would not have happened between the same
group entities, but with a trade vendor and trade customer by HQ in Germany,
than it would have been an example of drop shipment and not intercompany
transaction. Hope this clarifies your doubt of the difference between drop
shipment and intercompany transaction.

Now I would try to explain the context of EU Triangular deal as well. If we

take the same context of the automobile manufacturer with HQ in Germany, it
is procuring Engine Part from a subsidiary with a VAT Reg No in Poland to a
manufacturing & assembly facility of Car in Spain and than sells the final cars
from Spain to a end customer like you and me in Japan, this whole process
would entail a triangular inter-company transaction. Here the goods are being
ordered by a VAT No in Germany (German HQ) to a VAT No in Poland
(Subsidiary in Poland) for the goods to be manufactured in Spain (a 3rd VAT
No) for an export sale to a customer in transaction. From a Financial
perspective, all the entities in Poland, Spain and Germany are in the same
group. Any profit on sale within a group, also called as markup and revenue
needs to be eliminated at a group level, since these are inter-company
transactions. However, from a pure VAT Perspective, the transactions are
happening within multiple VAT No and are subject to tax (Zero rated supply
within EU due to VAT Simplification). However, they also need to reported in
Intrastat and VAT Reports. So a final trade invoice sale to a customer in Japan
for car is preceded by Intercompany Sale and Drop Shipment. However, from
VAT perspective, each of this is a seperate transaction, but essentially is a
drop shipment process with specific tax implications. I would not go into
further details of tax laws as that is where the complication starts on how
VAT liability and reporting criterion starts. This is something, i am sure, you
can dig deep and learn over time. A good source of information on taxation
would be below:

https://europa.eu/european-union/topics/taxation_en

I would also strongly recommend to draw process flows and check the VAT
implications, if you really want to be an expert in supporting EU Taxes.

https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/
80a58aef89b3425f8c334dc588567789/4912ceb03d2c209ce10000000a42189d.html

https://globalindirecttaxmanagement.com/thought-leadership-publications/chapter-2-building-
blocks-of-an-indirect-tax-strategic-plan-4/sap-and-vat-simplified-triangular.html
As I understand from your questions, sales process happens from the plant
abroad, Italy sales area is selling from Germany plant. For that SAP has a
OSS note-10560 to capture this where tax will be determined from the Company
code of Sales organisations.
For EU triangular deal, you can go through the OSS note no-938150 which may
give you some information how to proceed as per your business requirement.

Try and add the logic in MV45AFZZ.

SAP offers two methods of inventory valuation and product costing: standard cost and (weighted)
moving average. The method to be used is identified on the material master level, thus different
materials can use different methods within a plant. The decision to use moving average for certain
materials should reflect the approach used to analyze contribution margins, and variances in
manufacturing and purchasing.

can change from S to V price control at any time. The target field, in this
case the Moving average price, is overwritten with the Standard price to
endure there is no change in inventory valuation for existing stock.

SAP reccomends standard price control for all semi-finished and

finished products since problems with moving average price can occur if
you consume more assemblies than you produce during a period. There
may not be enough stock coverage to absorb differences when settling
production orders at period-end leading to an unrealistic moving
average price.
Since, the local statutory requires inventory be valued at moving average prices, we needed this statistical
information in the material master for all purchased materials

the common practice is to manage the purchase materials at V and produced materials at S. That does not
mean you must use V for purchased materials. Yes, the statutory requirement in most countries is to valuate
the inventories at cost or market value, whichever is lower,

For all S materials (purchased or produced), the system also updates V prices after every goods receipt
(from Purchase Order, Production Order and Variance Calculations). This means that the Moving Average
Price is updated in the system with the actual cost of purchase/production as of the month-end (assuming
all the production orders variances are settled).

Remember, the material master has two price fields, Standard and Moving; and the other price field is
always available for change. Alternatively, use Balance Sheet Valuation menu to copy this value from
Moving Average to Commercial Price 1 for statutory reporting, and post the difference/adjustments
manually in adjustment accounts (automatic option will overwrite your inventory values).

Setting standards helps the management to control costs and monitor performances of various functions,
and variances have to be appropriately responded by the respective manager. Standards are set for a defined
period , one year and measure the performance for that year against the standard. Thats how it works even
for deciding individual's monetary incentive (Variable pay you may call ) !!!!

In MR21 you can change standard price and moving average price.

You only need to know that MR21 does not have a column for standard price
and moving average price. In MR21, there are 2 columns as New price and
New statistical price

If your material is standard price valuated, then the standard price is just New
price and then moving average price statistical price

if your material is moving average price valuated, then MAP is New price and
the standard price is the statistical price.
Go to OMS2 and find your material type and deselect price ctrl mandatory.

then goto MM02 and change the price of material in V (moving avg price ) or S
(standard price ) which you wanted to do

In the same way, if you need to change the price control for many materials,
then you can use MM17 for the same.

https://help.sap.com/saphelp_46c/helpdata/en/
47/60ff6249f011d1894c0000e829fbbd/frameset.htm

https://blog.sap-press.com/what-is-the-difference-between-moving-
average-price-and-standard-price-in-sap
Yes you can. You can use MM02 to change the price indicator from V to S.
Here is what the system does when you do this. It copies the, till then, moving
average price to the standard price field when you save.

What this means is that there is no impact when you change the indicator.
Lets say, till the time you did the change the moving avg price was 15 and
standard 10. Stock of 100 units will carry value 1500. You then change it to S.
The system changes the indicator but does not change the stock value. The
moving avg and standard price will both be 15.

Now you want to bring back the standard price to 10. You need to use MR21
and revaluate the material to price 10. The stock value then become 1000 and
the balance of 500 us posted to the consumption account for inventory.

So you will have the following accounting entry generated:

Cr inventory (balance sheet account)----- 500

Dr change in inventory (P&L account)----- 500

Once you have changed to S, going forward all inventory postings (issues and
receipts) will happen at the rate of 10 and any differentials will get posted to
value difference.

https://sap-f2.blogspot.com/2009/07/price-control-changing-type-of-
price.html
More check the notes: 72147, 1118703 & 882259

Check Tcode OMSR & OMS9 or

SAP also suggests you use moving average price for

purchased materials. Inventory is revalued for every goods and invoice
receipt with a price different to the moving average price. While this
provides the advantage of real-time inventory valuation, it has the
disadvantage of not providing purchase price difference as we discuss
in my blog: PPV postings for analysis.

If you set price control to standard for purchased materials all price
differences will post to PPV GL accounts which you can analyze to help
you understand why actual price differs to plan purchase price. While
this promotes more accountability for purchased materials price, it has
the disadvantage that inventory valuation may not be as accurate as
with moving average price.
Your goal of setting purchased materials to standard price is to
progressively reduce PPV postings by correcting the cause of the
variances. PPV postings will become less significant over time as you
gain a better understanding of how the differences occur. You gain
close-to real-time inventory valuation and purchasing controllability as
you reduce PPV.

Cost Estimate
A cost estimate calculates the plan cost to manufacture a product or
purchase a component. It determines material costs by multiplying
BOM quantities by the standard price, labor costs by multiplying
operation standard quantities by plan activity price, and overhead by
costing sheet configuration.

Costing BOM
Costing BOMs are assigned a BOM usage of costing and are usually
copied from BOMs with a usage of production. You can make
adjustments to costing BOMs if you require them to be different from
production BOMs. With system-supplied settings, standard cost
estimates search for costing BOMs before production BOMs.

Valuation Variant
The valuation variant is a costing variant component that allows
different search strategies for materials, activity types, subcontracting,
and external processing. For example, the search strategy for
purchased and raw materials typically searches first for a price from the
purchasing info record.
1) If you are revaluating the Stock, earlier it was Rs 80 & Now Rs 100
Difference of Rs 20 will be posted as Price difference. Stock
increases & Expenses Increases.

Material A/C Dr

Price diff A/c Cr

2) If you are revaluating the Stock, earlier it was Rs 100 & Now Rs 80
Difference of Rs 20 will be posted as Price difference. Expenses
Decreases & Stock decreases.

Price Diff A/c Dr

Material A/C Cr

Price at which a material is valuated:

 Materials with price control S are be valuated with the

standard price.

 Materials with price control V are valuated with the moving

price (moving average price/periodic unit price).