| # Value added tax (VAT) Various value added tax (VAT) rates apply to the goods transfer within a single country and between countries. In addition, special rates apply to transactions between countries of the European Union (EU). You can set up the default tax codes for the various transactions as described in To define default tax codes. Tax numbers Legal persons and businesses are identified in a specific country by a tax number. You can enter the tax numbers in the Tax Numbers by Business Partner (tctax4100m000) session. In the Countries (tcmcs0110s000) session, you can select the tax number check algorithm that ERP Enterprise applies to the tax numbers in the country. Business partners that do not have a tax number in a specific country are considered to be private persons in that country instead of commercial businesses. By default, ERP Enterprise uses the domestic VAT tax code for all transactions with private persons. Supply of goods with installation or assembly Special rules apply to goods that must be assembled or installed on arrival, for example, if you build a radar unit on location. This type of transactions typically occurs in a project or service environment. Therefore, ERP Enterprise uses the ship-to address to determine the country and the business partner's tax number for Project and Service transactions. To determine the tax country and the tax code To comply with the VAT rules for import and export, ERP Enterprise must determine the tax country of each transaction. ERP Enterprise uses the Country field in the Addresses (tccom4130s000) session of the various addresses to determine the tax countries. The sold-to and buy-from business partner's addresses appear by default on the sales orders and purchase orders. In addition, the ship-from country, the ship-to country, the point of title passage, and/or the service location, as applicable, can also determine the tax country of a transaction. Special tax codes can apply to the freight orders for goods movements within or between countries. For details, refer to Tax codes for freight orders Triangular trade Within the Europan Union, triangular trade refers to supplies of goods involving three parties of which at least two reside in EU member states, if one party ships the goods to the customer and another party invoices the customer for the goods. The goods are usually delivered to the customer as a direct delivery. If the party that ships the goods to the customer and the party that invoices the customer both belong to your organization and reside in different EU coutnries, the simplified triangular trade procedure applies. In this case, your organization does not have to be registered for tax in the country of the customer. Example A customer in France orders goods from your sales office in Germany. You ship the goods from your warehouse in Belgium directly to the customer in France. The sales office generates an invoice for the invoice-to business partner in France. Depending on the selection of the Allow Simplified Triangulation between Own Entities check box in the Tax Parameters (tctax0100m000) session, the following takes place: The check box is selected ERP Enterprise uses the ICT ABC Transactions tax code for the invoice. Your organization does not have to be registered for tax in France. The check box is cleared ERP Enterprise uses the ICT Sales tax code for the invoice and your organization must be registered for tax in France. Related topics Setting up tax registration Tax codes for freight orders |