As part of the federal government’s comprehensive economic stimulus package, VAT is to be reduced for a limited period from July 1 to December 31, 2020 for the standard tax rate from 19% to 16% and for the reduced tax rate from 7% to 5%.
The changed tax rates can be found in SAP Business ByDesign together with the validity period in the configuration. For a seamless transition, it is advisable to configure the changes now. This ensures that invoices contain the regular or reduced VAT rate depending on the invoice date.
Changes to the tax rate can be made directly in the SAP Business ByDesign are recorded
In the work center Business configuration you can save the entries as Immediate change make. It is not necessary to create a change project to adjust the tax rates. To do this, select the task Tax on supplies and services the end.
Within the task Tax on supplies and services you can define the tax rate tables by entering the new tax rates with the corresponding validity date.
Our tip: Make sure that you enter the original VAT rates with a valid-from date from 01.01.2021. This means that the system reactivates the tax rates automatically after the deadline.
Deviations from the purchase date and posting date can be recorded in the ERP system in the Tax date field
After the statutory implementation of the reduction in the VAT rate, the following must be observed and recorded in the ERP system according to the individual case (information without guarantee, please coordinate with your tax advisor):
- In the event of a change in the tax rates, the tax rate applicable at the time at which the turnover is carried out is to be applied (see Section 12.1 Paragraph 2 UStAE). You should not equate the time at which sales are generated with the date of receipt of payment or the time of invoicing. The new tax rates are therefore to be applied to sales that are effected after July 1, 2020.
- The same applies to the actual taxation of down payments (Section 13 Paragraph 1 No. 1 Letter a Sentence 4 UStG) when the turnover is made. This applies regardless of when the tax pursuant to Section 13 Para. 1 No. 1 UStG (see Section 12.1 Paragraph 3 UStAE).
- Special case of partial services (see section 12.1. Para. 4 UStAE): If services are owed in economically distinct parts (partial services), different tax rates may come into consideration due to the change in tax rate. Partial services are taxable at the previous tax rate if they were effected before the change in tax rate came into force. The new tax rate is to be applied to the partial services effected thereafter.
- In addition, you should also deal with the changes in the reverse charge procedure and credits in the 16% period, which relate to sales in the 19% period. There may be special cases here that have to be considered separately.
SAP Business ByDesign determines the tax rate automatically on the basis of the tax date of the respective item in the document, e.g. for customer invoices, by default on the delivery date for each invoice item. If necessary, you can manually change the tax date to determine the correct tax rate.
Image source: blogs.sap.com
To clarify which tax rate applies to long-term contracts with regard to the service period, please contact your auditor or tax advisor.
You should pay attention to that now
- Configure new tax codes in the ERP system
- Store the validity of the new tax rates with the start and end date in the ERP system
- Adjust invoice layouts with new tax rate
- The above-mentioned increased requirements for the determination of service and delivery times must be observed
- Consult your tax advisor for specific requirements (e.g. reverse charge procedure, return conditions)
This article on adjusting VAT rates for a limited period of time is intended to give you an initial overview. If you have any questions, please do not hesitate to contact us. We support you with the configuration in SAP Business ByDesign so that the changes become active in the system in good time.
This post is based on the blog post by Sissi Ruthe in the official SAP blog, available at https://blogs.sap.com/2020/06/08/umsetzung-der-mehrwertsteuerersenken-in-sap-business-bydesign-implementation-of-vat-reduction-in-germany/
The points listed are based on the sales tax application decree (“UStAE”). All statements without guarantee.