Germany’s Value Added Tax Change made easy with SAP S/4HANA Time-Dependent-Tax

The German government recently agreed on a €130bn fiscal stimulus to mitigate the economic damage of the coronavirus pandemic. This stimulus includes a temporary cut in value added tax: from July 1 until the end of 2020, the standard VAT rate shall be reduced from 19% to 16% (7% to 5% for the reduced tax rate). As the legal framework with all its details has been made available by the German Ministry of Finance your business systems need to be adopted quickly.

For SAP, tax rate changes are nothing new. Over the past years, several countries have changed their respective VAT rates (such as Japan in 2015 and Switzerland in 2018). SAP issued a SAP note, with category “legal change”, explaining the detailed configuration steps necessary in the system to handle such a tax change (example: note 984842 for past Germany VAT change in 2007).

For SAP S/4HANA Cloud (ES), the tax change procedure is even simpler. The built-in feature ‘Time Dependent Taxes’ (TDT), helps you to flexibly manage tax rate changes in a very efficient manner.

All it takes are few clicks in a simplified configuration UI, which essentially boil down to the following steps:

• In the App “Configure Your Solution” – area “Finance / Statuary Reporting” –  select “Define Tax Codes for Sales and Purchases”
• Select Country “Germany”, choose a new validity date and add the new tax rate amount

Please take a look at our OpenSAP Microlearning, which demonstrates the above-mentioned configuration steps in SAP S/4HANA Cloud (ES) for this VAT Change in Germany.

In addition please check out the SAP Note 2936050 for the necessary adaptions in MM, SD, Concur and CLM. Also KBA 2936931.

In case you migrate to TDT please follow the instructions and do not forget to check note 2937978.

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