Dealing with Reverse Charges from international Tax Schemes is now a child’s play
Only two things in life are certain: death and taxes! (Benjamin Franklin)
While globalization progresses and companies grow, every country still has its very own tax scheme. When Vendors deliver goods within a country, deliveries are simply taxed with regular (domestic) VAT rates, but when orders are placed where a Vendor delivers goods to other countries, things become more complicated. Because different countries mean different Tax Schemes.
Complex Tax Issues can cause quite some headache…
In particular Tax Reverse Charge systems can be challenging for companies’ Accounting departments. When goods receiving Cost Centers are located in different countries within the European Union, the delivery must be regarded as intracommunity acquisition. That means based on Reverse Charge system the VAT liability is passed on to the buyer. Tax handling in such cases is much more complex than it is for domestic purchases and can be a cumbersome task.
To solve this problem, we thought about an option to define more than one Country Tax Scheme per Vendor.
How do we handle this?
We provide a solution that allows you to use different Tax Rates and Tax Codes that can conveniently be passed on to Accounting. We established Tax Scheme Override options per Country to be used for their different Vendors. We implemented a whole new Master Data submodule for “Countries” to manage such issues all in one place.