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Entry process for new VAT rules

Introduction

To ensure that you are able to register and report the VAT data according to the regulations for 2010, you must perform the entry process based on the classification of the items.

Description

When an item is classified as goods, a VAT code for goods has to be used. When an item is classified as services, the VAT code for services has to be used. When creating entries, the VAT code defined in the VAT field in the debtor maintenance is suggested by default. You are required to ensure that correct VAT codes for goods and services are entered based on the classification of the items.

As there are changes in the VAT codes, EU sales list, and VAT return, here are the steps to ensure that you can register and declare your VAT according to the rules for 2010.

You are required to define separate VAT codes for goods and services so that the goods and services on the EU sales list are split when your company has customers in foreign countries. In this case, there are three possible scenarios:

1. You only deliver goods
2. You only deliver services
3. You deliver goods and services

For each scenario, a different situation applies:

Scenario 1

When you only deliver goods, you do not have to change anything. When you link your VAT codes at the debtor maintenance, you can keep those links. At the item maintenance, you have the possibility to define the items as goods. But this is not a mandatory step in this situation.

Scenario 2

When you only deliver services, you have to adjust the following:

• Create a VAT code with the type Listing services. Make sure you link the correct VAT boxes to this code to ensure that the amounts will be shown at the correct places on the return.
• Next, link this new VAT code to the foreign debtors maintenance. You can link this VAT code at the field VAT and VAT services. This way, the VAT code will be suggested by default when creating entries for this debtor.

Scenario 3

When you deliver both services and goods, you have to adjust the following:

• Create a VAT code with the type Listing services. Make sure you link the correct VAT boxes to this code to ensure that the amounts will be shown at the correct places on the return.
• When creating entries, you have to select this new VAT code when the entry applies to services. During the creation of the entry, the default VAT code of the debtor will be used. In the previous situation, you have to manually replace this VAT code by a VAT code of 0%. In this situation during the creation of the entry, you have to manually replace the suggested VAT code with the type Listing services.

Related document

• New Value-Added Tax (VAT) rules for European Union (EU) countries