SAP Best Practices for Fiscal Representative Scenraio

[Former Member]

Hello Friends,

Need your inputs to understand the SAP best practices to implement the solution . Currently we are doing the implentation for one of european client. During the requirement, we identified the unique requirement which is common in european business, and the requirement is billing to fiscal representative and also from fiscal representative. The representation of the process is -

A Company not established in a countries where company needs to engage a transactions subject to the local VAT such as: building services, storage, events, imports carried out in this state in the name of main company and any operation of "purchase/resale" carried out in this state. To do such transactions, company obligation to register for VAT in the concerned state or country with a local VAT number.

To obtain this, Company order appoints a Fiscal Representative who:

a. Ensures Company for tax legislation and allows to answer the obligations as regards to local VAT .

b. Deals with the VAT declarations including the requests for refunding and Intrastate.

c. Manages the registration near the tax authorities, Company VAT Balance, the follow-up of the payments of VAT .

d. Takes care for any correspondence with the local tax authorities, including in the event of tax control.

These representatives are also responsible for billing intercompany customers and also final customers for the local tax obligations.

Business Requirement -

Client need to setup a fiscal representatives in ECC wherever applicable other than company code country

These representatives having a separate VAT number per country

These representatives do operations on behalf of main company code in the countries

Example scenario -

Business Case 1

There are two company codes, A100 in ITALY and A200 in Switzerland

A200 appoints a fiscal representative in Italy for Italian operations

A100 supply the goods to A200 but the intercompany bill is raised between A100 to A200's fiscal representative in Italy.

By our internal observation and the ground work, we confirm that the SAP Plant abroad functionality can be fulfilled for this requirement. However, our customer wants to understand how the other clients are doing and the best practices.

Thanks in advance to share your inputs

Best Regards,

Goutham

[former_member132417]

Dear Goutham

Standard SAP plant abroad scenario needs to be activated if a legal entity in one country needs to do vat reporting in another country. This is a recommended approach,as

You willneed to define a unique tax codes across your european landscape with a 1:1 relationship between tax code and reporting country. Therefore SAP also recommends to use a single tax procedure across Europe and link this to multiple countries. Although this is a recommended approach it is indeed possible to have different tax procedures so long as the tax codes are replicated across the relevant tax procedures.

However it is important to keep the following in mind:

1:1 relationshiop between tax code and reporting country in europe (even in country where fiscal rep is not used today but could be possibility in future)

Separate tax accounts per country since a legal entity reports to multiple countries.

Supply chain mapping of all flows is absolutely necessary especially in inter company scenarios which can be quite challenging to get the automated tax determination right

Review SAP OSS notes since standard behaviour of tax departure country and tax classification may not be suited for inter company scenarios.

Chain transactions are always challenging to implement, so keep sufficient time for reviewing need for user exits ?custom developments as they cannot be ruled out