Setting up Tax Codes for Germany

Use these steps to set up tax codes using the Germany Localization.

In the Tax Codes form, specify this information:

Tax System

If only one tax system is defined, this field is display-only. Verify that the tax system is an item-based tax system.

Tax Code and Description

Specify the tax code as defined in the general application.

Tax Jurisdiction

Specify the jurisdiction, if one is defined.

Category

Specify the category associated with the tax code. This field is only enabled when Activate EU Report is selected and the Germany Localization is licensed and enabled. The categories are defined on the EU VAT Reporting Categories form.

Next Level Tax Code

This field is disabled if you selected the Tax Discount/Allowance field on the Tax Systems form.

Tax Rate

Specify the tax rate for this tax code, as a percentage.

Transfer VAT

Select this check box to enable VAT recognition upon bank reconciliation. When you select this check box, the VAT amount paid by the customer is placed into the appropriate A/P tax account or A/R tax account at the rate specified by the assigned tax code. Upon bank reconciliation of the customer payment or deposit, the system determines the VAT amount to transfer after bank reconciliation. The VAT amount is then transferred to either the VAT A/R Received Account or VAT A/P Paid Account. The VAT is then paid to the taxing authority from this account.
This check box is enabled when Tax Mode is Item based for Tax System 1.

Tax Code Type

Specify the tax code type as defined in the general application.
Select these check boxes to indicate what should be included in the tax code:

Include Price

Select this field to tax the price.

Include Discount

Clear this field to assess no sales tax on the order level and line item discount amounts. Select this field to tax both types of discount amounts at the tax code rate.

Include Restock Fee

Select this field to tax the RMA Restock Fee.

Deductible

Select this field if the amount should be deducted from the amount of taxes owed. The Deductible field indicates that the item purchased is deductible from taxes (that is, the application user is not the end user of the item).

Include Freight, Duty, Brokerage, Insurance, or Misc Charges

Select these fields to tax these types of charges. If the field is selected, then the system determines whether the freight/duty/brokerage/insurance/misc tax code on the customer order header is exempt. These tax amounts are saved for tax reporting. If the field is cleared, then the system ignores this type of charge for tax purposes.

Include Surcharge

Select this field to indicate that the selected tax code includes surcharges when determining the basis for tax charges.

Assess on Return

Select this field if the tax should be computed when a tax return is printed. This indicates that the tax was never paid on the item and must be assessed at the time of the return. When this field is selected for a tax code, ** EU Acquisition is printed after this code on the EU VAT Report.

Include Tax on Prev System

This field is not relevant for the Germany Localization.
Specify these accounts and applicable unit codes to use for this tax code:
- A/R Tax Account: This account is used as the default account when posting the sales tax. Sales tax is posted during A/R invoice, debit, and credit memo processing. This field is enabled and required only when one of the following is true:
  - The Tax Rate field on this form is not set to zero (0).
  - On the Tax Systems form, Record Zero Rated is selected.
  This account temporarily receives the VAT payment when the invoice is posted if, on the Tax Systems form, Transfer VAT is selected. The VAT payment is later transferred during bank reconciliation to the VAT A/R Received Account field on this form.
- A/R Tax Account in Process: This account is used to record journal entries that are created during the order shipment approval and invoicing process. This account records costs for items that have received customer approval for the shipment.
- A/P Tax Account: This account is used as the default account when posting the sales tax. Sales tax is posted during A/P invoice, debit memo, and credit memo processing. This field is enabled and required only when both of these are true:
  - On the Tax Systems form, Active for Purchasing is selected
  - The Tax Rate field on this form is greater than zero (0) OR Record Zero Rated is selected on the Tax Systems form.
  This account temporarily receives the VAT payment when the invoice is posted if, on the Tax Systems form, Transfer VAT is selected. The VAT payment is later transferred during bank reconciliation to the VAT A/P Paid Account field on this form.
- VAT A/R Received Account: Upon reconciliation of customer payment, the VAT amount paid is transferred to this account from the A/R Tax Account. This field is enabled when Transfer VAT is selected.
- VAT A/P Paid Account: Upon reconciliation of customer payment, the VAT amount paid is transferred to this account from the A/P tax account. This field is enabled when Transfer VAT is selected on this form and Active for Purchasing is selected on the Tax Systems form.
- Acquisition VAT Account: This account is used as the default account when posting the sales tax. Sales tax is posted during invoice, debit memo, and credit memo processing. This field is enabled if the tax code is assigned to an EU tax category that must create offsetting tax entries.
Note: The Cash Basis, Retention Basis and DIOT Rate fields are not used for the Germany Localization.
Save your changes.