| To define default tax codes |  |
| In many countries, different tax rates apply to transactions within the country and transactions across country borders. In addition, special tax rules can apply to freight invoices. To define the default tax codes for the various types of transactions, take the following steps: Set up the tax codes as described in To set up tax registration. You must define a tax code for each tax rate in each country. In the Tax Handling (tctax0138m000) session, specify the default tax codes in each country. If a tax code applies to a specific item, you must specify the item. ERP LN applies the tax codes with an empty Item field to all the items for which you do not define specific tax codes. For domestic tax, the search path for the tax code includes the tax codes of the item data. For details, refer to Item tax codes for domestic tax. You can define default tax codes for the following types of tax: Domestic VAT Import VAT Export VAT Own goods movement Triangular trade Item tax codes for domestic tax For domestic tax, you can also link default tax codes to items or item groups in the following sessions: Item - Sales (tdisa0101s000). Items - Purchase (tdipu0101m000). Item - Sales Defaults (tdisa0102s000). Items - Purchase Defaults (tdipu0102m000). ERP LN uses these tax codes if you do not define a specific domestic tax code for the item in the Tax Handling (tctax0138m000) session. Default EU VAT codes If your company's home country is a member of the European Union, you must define specific tax codes for import and export to other EU countries. Special tax rules apply to freight invoices. You can define the following default EU tax codes: Intracommunautair transactions (ICT Sales VAT) Intracommunautair transactions (ICT Purchase VAT) Freight ICT Sales Freight ICT Purchase ERP LN uses the VAT codes for intra-EU transactions if the following is true: The business partners involved are legal persons, in other words, the business partners have a tax number in the country concerned. The transactions are posted to financial companies that reside in EU countries. The tax rates for intra-EU transactions apply to the following transaction types: Sales transactions and purchase transactions between your company and external business partners. Sales transactions and purchase transactions between affiliated-company business partners. Note ERP LN uses the country that you selected for the company in the General Company Data (tccom0102s000) session to determine whether or not the company resides in an EU member country. Default tax codes for financial transactions For transactions that you create in Financials, you can link a default tax code to a ledger account. In the Chart of Accounts (tfgld0108s000) session, select the default tax code in the Default Tax Code filed. For example, this is the default tax code for journal vouchers you create for the ledger account. Related topics Value added tax (VAT) To set up tax registration |