Learn about the new functionality of report RFUMSV25 and the prerequisite configuration steps to complete in order for the new functionality to work correctly. New in RFUMSV25 is that it now also can transfer a deferred acquisition tax and a reverse charge tax to their destination tax codes.
Reading this article you’ll learn how to:
- Use report RFUMSV25 correctly in order to process deferred reverse charge and deferred acquisition taxes
- Set G/L account settings for the correct postings when transferring the deferred taxes
Value-added tax (VAT) is a common tax system in the European Union. Most of the time, you can reclaim the VAT from the tax authorities as soon as the purchase invoice has been received. At the same time, as soon as a sales invoice has been created, you must pay the VAT to the tax authorities.
A deferred value-added tax (VAT) is a special VAT that you need only when reporting to the tax authorities after the related invoice has been paid. Until a couple of years ago handling of deferred VAT in an SAP system was not possible for a reverse charge VAT and acquisition VAT. At the end of 2013, SAP developed new functionality to also handle reverse charge and acquisition VAT correctly. I explain how use this functionality.
In the article “Set Up Tax Codes to Properly Report Deferred VAT,” I explain in detail the processing of a deferred VAT. In this new article I assume that the reader has knowledge of the deferred VAT process. I include some parts of the first article here for your convenience.
The principle of deferred VAT is that it is only to be reported as soon as the invoice has been paid. Deferred VAT is only applicable for purchasing.
A reverse charge VAT and an acquisition VAT consist of two parts. One part is a sales VAT, meaning this VAT amount is to be paid to the tax authorities, and the other part is a purchase VAT, meaning this VAT amount can be reclaimed from the tax authorities. Both parts are equal, so nothing is to be paid or received.
In a simple example, assume a purchase invoice has an amount of €1,000 and the VAT percentage of acquisition tax is 20 percent. An amount of €200 is to be paid and an amount of €200 is to be received from the tax authorities.
Authorities use a reverse charge VAT as a means to prevent tax fraud. An acquisition VAT is used for all cross-border goods or service movements within the European Union.
The terms VAT and tax are used both in this article. For this article there is no difference between VAT and tax.
The VAT Return Process
Periodically, you need to report the VAT to the tax authorities. This can be monthly or quarterly, depending on the country and the company size. The standard report for most EU countries is RFUMSV00. For some other countries (e.g., Germany or Portugal), there is a country-specific report. For the periodic VAT, running report RFUMSV00 or the country-specific reports is sufficient. The report to the tax authorities does not include invoices having a deferred VAT code.
In the case of a deferred VAT, however, you must report the VAT to the tax authorities as soon as the invoice has been paid. Because the standard VAT report doesn’t report deferred VAT codes, you first need to transfer the tax code from a deferred VAT code to a normal VAT code. You can complete this process by executing program RFUMSV25. I show you the new functionality of program RFUMSV25 in detail.
Set Up VAT Codes
You can maintain the settings for a VAT using transaction code FTXP. You can find the transaction in the customizing menu by following menu path Financial Accounting > Financial Accounting Global Settings > Tax on Sales/Purchases > Calculation > Define Tax Codes for Sales and Purchases. In the popup screen (not shown), you must enter the country and the tax code. After you press the Enter key, the screen shown in Figure 1 appears.
The deferred VAT code