VAT Legal Change 2014 and 2015

Subcontracting with Chargeable Components

Process Flow
Consumption-Based Offsetting (Same VAT rate)
Your company produces a range of motorcycles. You subcontract the assembly of the engines used in them to another company, Redware Co. Furthermore, you have recently
developed a new type of engine, which Redware Co. is to assemble, and now have to maintain the master data in the system.
First, you create a material master record for the engine, and then a purchasing info record for it, which specifies how much Redware Co. charges for the assembly of each engine –
JPY 2,000.
You then create separate records for each component involved in the engine’s assembly, for example, the crankcases, cylinders, and crankshafts. You create an info record for each
of the components, specifying how much you will charge the subcontractor for each.
Finally, you create a bill of material for the engine. The bill of material specifies which – and how many – components are required for the assembly of each engine.

ME21N ME2O ME2O or VL02N /SAPNEA/JSCR11

PO of Monitoring Stocks issue the Creating Invoices

Subcontracted of Material necessary quantity for Chargeable
Products Provided to Vendor of components Components

The system proposes the Dr)Vendor stock 300,000 Dr) Subcon-AR Pending 346,500
labor charge from the info
Cr)Raw material 300,000 Cr)Clearing Account 330,000
record for the subcontracting
product. Cr)VAT-Sales 16,500 (5%)
Derived from SD
Condition Record
(After April 1st, 2014)
MIGO MIRO /SAPNEA/MRCH F-53 (F110) /SAPNEA/JSCR19

Receive 7
Entering Consumption-
subcontracted Invoice Verification Outgoing Payment
Deductible AP based Offsetting
products

Dr)Subcon.Products 280,000 Dr)GRIR 14,000 Dr)Clearing Account 231,000 Dr)AP 14,700 Dr)Deductible AP 242,550
Cr)Inventory Change 280,000 Dr)VAT-Purchases 700(5%) Dr)VAT-Purchases 11,550 (5%) Cr)Bank Account 14,700 Cr)Subcon-AR Pending 242,550
Dr)Mat.Consumption 210,000 Cr)AP 14,700 Cr)Deductible AP 242,550
Cr)Vendor Stock 210,000
Dr)Manufacturing Exp 14,000 In case that the transitional measure is applied for this PO, VAT rate should be 5%. If not,
VAT rate should be 8%.
Cr)GRIR 14,000
Tax code manually Account for “tax rate difference” should be either “Deductible AP-Tax Difference” or “Other
assigned Revenue”.
Depending on the negotiation, the person who pays tax rate difference is decided.

© 2012 SAP AG. All rights reserved. 2

Process Flow
Consumption-Based Offsetting (Different VAT rate)
Your company produces a range of motorcycles. You subcontract the assembly of the engines used in them to another company, Redware Co. Furthermore, you have recently
developed a new type of engine, which Redware Co. is to assemble, and now have to maintain the master data in the system.
First, you create a material master record for the engine, and then a purchasing info record for it, which specifies how much Redware Co. charges for the assembly of each engine –
JPY 2,000.
You then create separate records for each component involved in the engine’s assembly, for example, the crankcases, cylinders, and crankshafts. You create an info record for each
of the components, specifying how much you will charge the subcontractor for each.
Finally, you create a bill of material for the engine. The bill of material specifies which – and how many – components are required for the assembly of each engine.

ME21N ME2O ME2O or VL02N /SAPNEA/JSCR11

PO of Monitoring Stocks issue the Creating Invoices

Subcontracted of Material necessary quantity for Chargeable
Products Provided to Vendor of components Components

The system proposes the Dr)Vendor stock 300,000 Dr) Subcon-AR Pending 346,500
labor charge from the info
Cr)Raw material 300,000 Cr)Clearing Account 330,000
record for the subcontracting
product. Cr)VAT-Sales 16,500 (5%)
Derived from SD
Condition Record
(After April 1st, 2014)
MIGO MIRO /SAPNEA/MRCH F-53 (F110) /SAPNEA/JSCR19

Receive 7
Entering Consumption-
subcontracted Invoice Verification Outgoing Payment
Deductible AP based Offsetting
products

Dr)Subcon.Products 280,000 Dr)GRIR 14,000 Dr)Clearing Account 231,000 Dr)AP 15,120 Dr)Deductible AP 242,550
Cr)Inventory Change 280,000 Dr)VAT-Purchases 1,120(8%) Dr)VAT-Purchases 18,480(8%) Cr)Bank Account 15,120 Cr)Subcon-AR Pending 242,550
Dr)Mat.Consumption 210,000 Cr)AP 15,120 Cr)Deductible AP 242,550
Cr)Vendor Stock 210,000 Cr)Deductibe AP-Tax Dif 6,930
Dr)Manufacturing Exp 14,000 In case that the transitional measure is applied for this PO, VAT rate should be 5%. If not,
VAT rate should be 8%.
Cr)GRIR 14,000
Tax code manually Account for “tax rate difference” should be either “Deductible AP-Tax Difference” or “Other
assigned Revenue”.
Depending on the negotiation, the person who pays tax rate difference is decided.

© 2012 SAP AG. All rights reserved. 3

Process Flow
Percentage-Based Offsetting (Same VAT rate)
Your company produces a range of motorcycles. You subcontract the assembly of the engines used in them to another company, Redware Co. Furthermore, you have recently
developed a new type of engine, which Redware Co. is to assemble, and now have to maintain the master data in the system.
First, you create a material master record for the engine, and then a purchasing info record for it, which specifies how much Redware Co. charges for the assembly of each engine –
JPY 2,000.
You then create separate records for each component involved in the engine’s assembly, for example, the crankcases, cylinders, and crankshafts. You create an info record for each
of the components, specifying how much you will charge the subcontractor for each.
Finally, you create a bill of material for the engine. The bill of material specifies which – and how many – components are required for the assembly of each engine.

ME21N ME2O ME2O or VL02N /SAPNEA/JSCR11

PO of Monitoring Stocks issue the Creating Invoices

Subcontracted of Material necessary quantity for Chargeable
Products Provided to Vendor of components Components

The system proposes the Dr)Vendor stock 300,000 Dr) Subcon-AR Pending 346,500
labor charge from the info
Cr)Raw material 300,000 Cr)Clearing Account 330,000
record for the subcontracting
product. Cr)VAT-Sales 16,500(5%)
Derived from SD
Condition Record
(After April 1st, 2014)
MIGO MIRO /SAPNEA/MRCH /SAPNEA/JSCR19 F-53 (F110)

Receive 7
Entering Percentage-based
subcontracted Invoice Verification Outgoing Payment
Deductible AP Offsetting
products

Dr)Subcon.Products 280,000 Dr)Clearing Account 231,000 Dr)Subcon-AR Due 138,600 Dr)AP 14,700
Dr)GRIR 14,000
Cr)Inventory Change 280,000 Dr)VAT-Purchases 11,550(5%) Cr)Subcon-AR Pending 138,600 Dr)Deductible AP 242,550
Dr)VAT-Purchases 700(5%)
*Offset % (Deferred %) is 60%. Cr)Subcon-AR Due 138,600
Dr)Mat.Consumption 210,000 Cr)AP 14,700 Cr)Deductible AP 242,550
346,500 * 40% = 138,600
Cr)Vendor Stock 210,000 Cr)Bank Account 118,650
Carried-forward is zero in this case.

Dr)Manufacturing Exp 14,000 In case that the transitional measure is applied for this PO, VAT rate should be 5%. If not,
VAT rate should be 8%.
Cr)GRIR 14,000
Tax code manually Account for “tax rate difference” should be either “Deductible AP-Tax Difference” or “Other
assigned Revenue”.
Depending on the negotiation, the person who pays tax rate difference is decided.

© 2012 SAP AG. All rights reserved. 4

Process Flow
Percentage-Based Offsetting (Different VAT rate)
Your company produces a range of motorcycles. You subcontract the assembly of the engines used in them to another company, Redware Co. Furthermore, you have recently
developed a new type of engine, which Redware Co. is to assemble, and now have to maintain the master data in the system.
First, you create a material master record for the engine, and then a purchasing info record for it, which specifies how much Redware Co. charges for the assembly of each engine –
JPY 2,000.
You then create separate records for each component involved in the engine’s assembly, for example, the crankcases, cylinders, and crankshafts. You create an info record for each
of the components, specifying how much you will charge the subcontractor for each.
Finally, you create a bill of material for the engine. The bill of material specifies which – and how many – components are required for the assembly of each engine.

ME21N ME2O ME2O or VL02N /SAPNEA/JSCR11

PO of Monitoring Stocks issue the Creating Invoices

Subcontracted of Material necessary quantity for Chargeable
Products Provided to Vendor of components Components

The system proposes the Dr)Vendor stock 300,000 Dr)Subcon-AR Pending 346,500
labor charge from the info
Cr)Raw material 300,000 Cr)Clearing Account 330,000
record for the subcontracting
product. Cr)VAT-Sales 16,500(5%)
Derived from SD
Condition Record
(After April 1st, 2014)
MIGO MIRO /SAPNEA/MRCH /SAPNEA/JSCR19 F-53 (F110)

Receive 7
Entering Percentage-based
subcontracted Invoice Verification Outgoing Payment
Deductible AP Offsetting
products

Dr)Subcon.Products 280,000 Dr)Clearing Account 231,000 Dr)Subcon-AR Due 138,600 Dr)AP 15,120
Dr)GRIR 14,000
Cr)Inventory Change 280,000 Dr)VAT-Purchases 18,480(8%) Cr)Subcon-AR Pending 138,600 Dr)Deductible AP 242,550
Dr)VAT-Purchases 1,120(8%)
*Offset % (Deferred %) is 60%. Cr)Subcon-AR Due 138,600
Dr)Mat.Consumption 210,000 Cr)AP 15,120 Cr)Deductible AP 242,550
346,500 * 40% = 138,600
Cr)Vendor Stock 210,000 Cr)Deductibe AP-Tax Dif 6,930 Cr)Bank Account 118,650
Carried-forward is zero in this case.

Dr)Manufacturing Exp 14,000 In case that the transitional measure is applied for this PO, VAT rate should be 5%. If not,
VAT rate should be 8%.
Cr)GRIR 14,000
Tax code manually Account for “tax rate difference” should be either “Deductible AP-Tax Difference” or “Other
assigned Revenue”.
Depending on the negotiation, the person who pays tax rate difference is decided.

© 2012 SAP AG. All rights reserved. 5

Process Flow
Inventory Shrinkage
If you supply a subcontractor with subcontracting components, and, during a physical inventory, it turns out that some
of the components have gone missing or are otherwise unusable, you may want to invoice the subcontractor for them.

MI01 MI08 /SAPNEA/JSCR30

Entering and
Creating Physical Invoicing
Posting the
Inventory Subcontractors for
Physical Inventory
Documents Shrinkage
Count

Dr)Losses on inventory Dr)Cost of sales 30,000

shrinkage 30,000 Cr)Losses on inventory
Cr)Vendor Stock 30,000 shrinkage 30,000

Chargeable components Dr)Clearing account 33,000

provided to a Dr)VAT-Sales 1,650(5%)
subcontractor when VAT
rate was 5% went missing. Cr)Subcon-AR Pending 34,650

Dr)AR 34,650
Cr)Sales 33,000
Cr)VAT-Sales 1,650(5%)

Chargeable components Dr)Clearing account 33,000

provided to a Dr)VAT-Sales 2,640(8%)
subcontractor when VAT
rate was 8% went missing. Cr)Subcon-AR Pending 35,640

Dr)AR 35,640
Cr)Sales 33,000
Cr)VAT-Sales 2,640(8%)

© 2012 SAP AG. All rights reserved. 6

© 2012 SAP AG. All rights reserved.

No part of this publication may be reproduced or transmitted in any form or for any purpose Google App Engine, Google Apps, Google Checkout, Google Data API, Google Maps,
without the express permission of SAP AG. The information contained herein may be Google Mobile Ads, Google Mobile Updater, Google Mobile, Google Store, Google Sync,
changed without prior notice. Google Updater, Google Voice, Google Mail, Gmail, YouTube, Dalvik and Android are
trademarks or registered trademarks of Google Inc.
Some software products marketed by SAP AG and its distributors contain proprietary
software components of other software vendors. INTERMEC is a registered trademark of Intermec Technologies Corporation.
Microsoft, Windows, Excel, Outlook, PowerPoint, Silverlight, and Visual Studio are Wi-Fi is a registered trademark of Wi-Fi Alliance.
registered trademarks of Microsoft Corporation.
Bluetooth is a registered trademark of Bluetooth SIG Inc.
IBM, DB2, DB2 Universal Database, System i, System i5, System p, System p5, System x,
System z, System z10, z10, z/VM, z/OS, OS/390, zEnterprise, PowerVM, Power Motorola is a registered trademark of Motorola Trademark Holdings LLC.
Architecture, Power Systems, POWER7, POWER6+, POWER6, POWER, PowerHA, Computop is a registered trademark of Computop Wirtschaftsinformatik GmbH.
pureScale, PowerPC, BladeCenter, System Storage, Storwize, XIV, GPFS, HACMP,
RETAIN, DB2 Connect, RACF, Redbooks, OS/2, AIX, Intelligent Miner, WebSphere, Tivoli, SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP BusinessObjects Explorer,
Informix, and Smarter Planet are trademarks or registered trademarks of IBM Corporation. StreamWork, SAP HANA, and other SAP products and services mentioned herein as well
as their respective logos are trademarks or registered trademarks of SAP AG in Germany
Linux is the registered trademark of Linus Torvalds in the United States and other countries. and other countries.
Adobe, the Adobe logo, Acrobat, PostScript, and Reader are trademarks or registered Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal
trademarks of Adobe Systems Incorporated in the United States and other countries. Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services
Oracle and Java are registered trademarks of Oracle and its affiliates. mentioned herein as well as their respective logos are trademarks or registered trademarks
of Business Objects Software Ltd. Business Objects is an SAP company.
UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group.
Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere, and other Sybase
Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, and MultiWin products and services mentioned herein as well as their respective logos are trademarks or
are trademarks or registered trademarks of Citrix Systems Inc. registered trademarks of Sybase Inc. Sybase is an SAP company.
HTML, XML, XHTML, and W3C are trademarks or registered trademarks of W3C®, Crossgate, m@gic EDDY, B2B 360°, and B2B 360° Services are registered trademarks
World Wide Web Consortium, Massachusetts Institute of Technology. of Crossgate AG in Germany and other countries. Crossgate is an SAP company.
Apple, App Store, iBooks, iPad, iPhone, iPhoto, iPod, iTunes, Multi-Touch, Objective-C, All other product and service names mentioned are the trademarks of their respective
Retina, Safari, Siri, and Xcode are trademarks or registered trademarks of Apple Inc. companies. Data contained in this document serves informational purposes only. National
product specifications may vary.
IOS is a registered trademark of Cisco Systems Inc.
The information in this document is proprietary to SAP. No part of this document may be
RIM, BlackBerry, BBM, BlackBerry Curve, BlackBerry Bold, BlackBerry Pearl, BlackBerry reproduced, copied, or transmitted in any form or for any purpose without the express prior
Torch, BlackBerry Storm, BlackBerry Storm2, BlackBerry PlayBook, and BlackBerry App written permission of SAP AG.
World are trademarks or registered trademarks of Research in Motion Limited.

© 2012 SAP AG. All rights reserved. 7

© 2012 SAP AG. Alle Rechte vorbehalten.

Weitergabe und Vervielfältigung dieser Publikation oder von Teilen daraus sind, zu Google App Engine, Google Apps, Google Checkout, Google Data API, Google Maps,
welchem Zweck und in welcher Form auch immer, ohne die ausdrückliche schriftliche Google Mobile Ads, Google Mobile Updater, Google Mobile, Google Store, Google Sync,
Genehmigung durch SAP AG nicht gestattet. In dieser Publikation enthaltene Informationen Google Updater, Google Voice, Google Mail, Gmail, YouTube, Dalvik und Android sind
können ohne vorherige Ankündigung geändert werden. Marken oder eingetragene Marken von Google Inc.
Die von SAP AG oder deren Vertriebsfirmen angebotenen Softwareprodukte können INTERMEC ist eine eingetragene Marke der Intermec Technologies Corporation.
Softwarekomponenten auch anderer Softwarehersteller enthalten.
Wi-Fi ist eine eingetragene Marke der Wi-Fi Alliance.
Microsoft, Windows, Excel, Outlook, und PowerPoint sind eingetragene Marken der Bluetooth ist eine eingetragene Marke von Bluetooth SIG Inc.
Microsoft Corporation.
Motorola ist eine eingetragene Marke von Motorola Trademark Holdings, LLC.
IBM, DB2, DB2 Universal Database, System i, System i5, System p, System p5, System x,
System z, System z10, z10, z/VM, z/OS, OS/390, zEnterprise, PowerVM, Power Computop ist eine eingetragene Marke der Computop Wirtschaftsinformatik GmbH.
Architecture, Power Systems, POWER7, POWER6+, POWER6, POWER, PowerHA, SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP BusinessObjects Explorer,
pureScale, PowerPC, BladeCenter, System Storage, Storwize, XIV, GPFS, HACMP, StreamWork, SAP HANA und weitere im Text erwähnte SAP-Produkte und -
RETAIN, DB2 Connect, RACF, Redbooks, OS/2, AIX, Intelligent Miner, WebSphere, Tivoli, Dienstleistungen sowie die entsprechenden Logos sind Marken oder eingetragene Marken
Informix und Smarter Planet sind Marken oder eingetragene Marken der IBM Corporation. der SAP AG in Deutschland und anderen Ländern.
Linux ist eine eingetragene Marke von Linus Torvalds in den USA und anderen Ländern. Business Objects und das Business-Objects-Logo, BusinessObjects, Crystal Reports,
Adobe, das Adobe-Logo, Acrobat, PostScript und Reader sind Marken oder eingetragene Crystal Decisions, Web Intelligence, Xcelsius und andere im Text erwähnte Business-
Marken von Adobe Systems Incorporated in den USA und/oder anderen Ländern. Objects-Produkte und Dienstleistungen sowie die entsprechenden Logos sind Marken
oder eingetragene Marken der Business Objects Software Ltd. Business Objects ist ein
Oracle und Java sind eingetragene Marken von Oracle und/oder ihrer Unternehmen der SAP AG.
Tochtergesellschaften.
Sybase und Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere und weitere im Text
UNIX, X/Open, OSF/1 und Motif sind eingetragene Marken der Open Group.
erwähnte Sybase-Produkte und -Dienstleistungen sowie die entsprechenden Logos sind
Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame und MultiWin Marken oder eingetragene Marken der Sybase Inc. Sybase ist ein Unternehmen der
sind Marken oder eingetragene Marken von Citrix Systems, Inc. SAP AG.
HTML, XML, XHTML und W3C sind Marken oder eingetragene Marken des W3C®, Crossgate, m@gic EDDY, B2B 360°, B2B 360°Services sind eingetragene Marken der
World Wide Web Consortium, Massachusetts Institute of Technology. Crossgate AG in Deutschland und anderen Ländern. Crossgate ist ein Unternehmen der
Apple, App Store, iBooks, iPad, iPhone, iPhoto, iPod, iTunes, Multi-Touch, Objective-C, SAP AG.
Retina, Safari, Siri und Xcode sind Marken oder eingetragene Marken der Apple Inc. Alle anderen Namen von Produkten und Dienstleistungen sind Marken der jeweiligen
Firmen. Die Angaben im Text sind unverbindlich und dienen lediglich zu Informations-
IOS ist eine eingetragene Marke von Cisco Systems Inc.
zwecken. Produkte können länderspezifische Unterschiede aufweisen.
RIM, BlackBerry, BBM, BlackBerry Curve, BlackBerry Bold, BlackBerry Pearl, BlackBerry
Torch, BlackBerry Storm, BlackBerry Storm2, BlackBerry PlayBook und BlackBerry App Die in dieser Publikation enthaltene Information ist Eigentum der SAP. Weitergabe und
World sind Marken oder eingetragene Marken von Research in Motion Limited. Vervielfältigung dieser Publikation oder von Teilen daraus sind, zu welchem Zweck und
in welcher Form auch immer, nur mit ausdrücklicher schriftlicher Genehmigung durch
SAP AG gestattet.

© 2012 SAP AG. All rights reserved. 8