About Tax Handling in EU Sales

IFS Cloud supports the following tax areas regarding Inter-EU Sales;

• Company with multiple supplying sites: When a company has several supplying sites, you need to set up tax rules for each combination of supplying site (country) and customer address. You also need to report tax when moving goods between sites in different EU countries within a company.
• Distance Sales: This is when a company is registered for VAT in a foreign EU country and VAT should therefore be levied according to the foreign country’s tax rate. You need to hold multiple Tax ID Numbers per company by country and also to hold multiple tax codes per Sales Item per country.

Specify your company's Tax ID numbers under Company/Tax Control/Invoice tab for the countries where the company has a tax registration. These Tax ID numbers will be printed on customer order documents and on invoices. You can also, per country, use a Branch to get country specific Customer Invoice number series.

Tax Classes are used to connect multiple tax codes to sales items. In each Tax Class you define tax codes per delivery country, tax liability and date. You can also, in a tax class, define different tax codes for a country, valid at different periods of time. Tax Liability can in this context be used to e.g. set up a specific tax code (rate) for a part of a country.

How to retrieve a tax code:

When you enter a customer order, the customers' delivery address, the Supply Country (default from Site) and the company to which the site belongs are used to find the customers' Tax Liability. The Tax Liability will then control retrieval of the tax code on each order line.

• Taxable: get the Sales item tax code or if a tax class is connected to the sales item, get the tax code for the delivery country and the applicable tax liability valid at the transaction date.
• Exempt: get a tax free tax code set up for the delivery address, by delivery type from the sales item.

When there's no Site involved, e.g. for an Instant Invoice, the same rules apply except for one thing, the Company Country will default to Supply Country in the Invoice header.

How to retrieve Tax ID Numbers (VAT Numbers):

The customers' Tax ID Number will be retrieved from the invoiced Customers' document address. Based on our company ID and the Supply Country, the appropriate Tax ID Number will be retrieved.

Our own company's Tax ID Number will, when an invoice is created, be retrieved in the following way:

• If all lines have the same delivery address country and are all taxable in a country in which our company has a tax registration, then our company's Tax ID no. in the delivery country will be quoted.
• otherwise the supply country Tax ID no. will be quoted.

When creating Collective Invoices, order lines are grouped based on order header info, but also on line delivery country and tax liability type. Taxable order lines with a delivery address country in which our company has a tax registration will therefore be grouped together so that our company's Tax ID no. in the delivery country can be quoted on the invoice.

For all other grouped order lines, the supply country Tax ID no. will be quoted on the invoice.

Example scenario: Intra-EU Sales, B2B

Delivery from Germany to Sweden. Our company does not have a tax registration in Sweden, so this is an intra-EU sales.
The customer has one address which is delivery as well as document address. The address should be set up for Exempt when Supply Country is Germany.
Tax Free Tax Codes defined for this address will be used on each Invoice Line, based on Delivery Type.
The customer's Tax ID Number defined for the address, for company MWDE and Supply Country GERMANY will be quoted.
Our own company's Tax ID Number for GERMANY will also be quoted.

Example scenario: Intra-EU Sales, seperate invoiced customer

Delivery from Germany to Sweden. Our company does not have a tax registration in Sweden, so this is an intra-EU sales.
The delivery goes the ordering customer but the invoice is sent to the Invoice customer.
The ordering customer's delivery address SE4 should be set up for Exempt when Supply Country is Germany.
Tax Free Tax Codes defined for this address will be used on each Invoice Line, based on Delivery Type.
The invoiced customer's Tax ID Number defined for the document address SE5, for company MWDE and Supply Country GERMANY will be quoted.
Our own company's Tax ID Number for GERMANY will also be quoted.

Example scenario: Export Sales

Delivery from Germany to Norway. Our company does not have a tax registration in Norway, so this is export sales.
The customer has one address which is delivery as well as document address. The address should be set up for Exempt when Supply Country is Germany.
Tax Free Tax Codes defined for this address will be used on each Invoice Line, based on Delivery Type.
The customer's Tax ID Number, if defined for the address, for company MWDE and Supply Country GERMANY will be quoted.
Our own company's Tax ID Number for GERMANY will also be quoted.

Example scenario: Company with multiple supplying sites

Our company has two supplying sites, one in Germany and one in France. The customer's address in France (delivery as well as document) therefore needs multiple settings, depending on the supply country.

Supply Site Country GERMANY: Delivery from Germany to France, so this is an intra-EU sales.
The customer's delivery address should be set up for Exempt when Supply Country is Germany.
Tax Free Tax Codes defined for this address will be used on each Invoice Line, based on Delivery Type.
The customer's Tax ID Number defined for the address, for company MWDE and Supply Country GERMANY will be quoted.
Our own company's Tax ID Number for GERMANY will also be quoted.

Supply Site Country FRANCE: Delivery within France, where our company has a tax registration.
The customer's delivery address should be set up for Tax when Supply Country is France.
Tax codes will be picked from sales items or if tax classes are used, tax codes defined for delivery country FRANCE will be picked.
If a customer's Tax ID Number is required it will be picked from the address, for company MWDE and Supply Country FRANCE.
Our own company's Tax ID Number for FRANCE will be quoted.

Example scenario: Distance Sales to Consumer

Delivery from Germany to Sweden. Our company has a tax registration in Sweden, but the customer (consumer) does not have a tax registration.
The customer has one address which is delivery as well as document address. The address should be set up for Tax regardless of Supply Country.
A tax class should be connected to the sales part, in which delivery country Sweden should be linked to a tax code with the Swedish tax rate.
Our own company's Tax ID Number for SWEDEN will be quoted.