Registration for Indirect Taxation Abroad with SAP S/4HANA Cloud 2202

Co-Authored by Calin Cernea, Mirella Vorsprach, Ulrich Hauke

What is Registration for Indirect Taxation Abroad (RITA)? 

The indirect tax regime has undergone a fundamental change over time. With growing international economic trends and digital economies, many countries over the world allow foreign companies to register for indirect taxes in the country / jurisdiction without setting a permanent establishment.

Registration for Indirect Taxation Abroad enables legal entities to step out of national / jurisdictional borders and extend business abroad.

RITA is the solution in SAP S/4HANA Cloud enabling a single legal entity to perform indirect tax calculation in multiple countries. Therefore, RITA is not intended for permanent establishments abroad.

Figure 1: RITA Business Case

Value Proposition

• End-to-end process-oriented solution orchestrated by standard business processes
• Mapping of tax treatment requirements to automated SAP processes
• Planned support for countries outside of the EU to achieve global coverage
• Lean SAP S/4HANA Cloud organizational set-up without redundant IT artifacts
• Compliance excellence through automated processes to avoid error-prone manual interventions
• Reflecting true tax logic in customizing: Tax codes are defined for a country / jurisdiction instead of for a company code
• Enable legal reporting in tax reporting currency
• Enhanced user experience and transparency, e.g., dashboard activation
• Wizard-like five steps for RITA Activation
• Simulation before activation is possible
• Activation at a company code level
• Final activation with SAP guidance

Current Availability of RITA in Release 2202 

Registration for Indirect Taxation Abroad (RITA) allows you to maintain a tax registration country that is different from the company code country. This registration helps you link taxable transactions in foreign countries for indirect tax reporting. With SAP S/4HANA Cloud release 2202, RITA is enabled for the following nine countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Netherlands and Spain.

Let me give you 2 examples of possible combinations:

• Germany GmbH represented by a company code (e. g. 1010) in SAP S/4HANA Cloud with tax abroad in Belgium and Netherlands. No specific company code required for indirect taxable business transactions in Belgium and Netherlands.
• Germany GmbH represented by a company code (e. g. 1010) and Belgium BVBA represented by a company code (e. g. 2510) in SAP S/4HANA Cloud. Both with tax abroad in Spain and Austria. No specific company code required for the indirect taxable business transactions in Spain and Austria.

This results in the following list of all possible combinations in SAP S/4HANA Cloud 2202:

Figure 2: Current RITA Country Combination Coverage

‘Country activation’ means that a regular country activation according to SAP Activate is prerequisite to run RITA in that country. Apart from that you can run RITA in Germany and Belgium w/o a country activation rather than activating the scope items mentioned in Figure 2.

Beyond of this, additional functionalities in RITA are already available within the Early Adopter Care program before released later. This includes additional tax countries as well as End-To-End (E2E) business processes:

• Sell from stock delivered from a physical stock abroad.
• Customer consignment abroad
• Intercompany stock transfer process
• Intracompany stock transfer process
• Procurement to stock abroad
• Intercompany sales from stock delivered from a physical stock abroad
• Supplier Consignment Abroad
• Customer Returns Abroad
• Customer Returnable Abroad

For more information, please see SAP Early Adopter Care.

How to Activate RITA in SAP S/4HANA Cloud

RITA is activated in the following 5 steps:

1. Prepare: how to make sure that the system is ready for the migration to RITA
2. Initiate: your configuration expert prepares the system for the migration to RITA and let’s your G/L accountant know that they can schedule the migration to RITA
3. Run: your G/L accountant schedules and runs the migration including error handling
4. Verify: Test the results of the migration before completing it and activating RITA
5. Complete: when you decide to use the solution productively, open a ticket so that SAP services can complete the migration. Configuration can be initiated.

Figure 3: RITA Activation with SAP Central Business Configuration

Define Foreign Plant with SAP Central Business Configuration (for Early Adopter Customer)

In this demo a foreign plant is defined in the RITA country Belgium and assigned to the Company Code Germany. Address and postal code are mandatory and there are validations to ensure that address attributes are consistent as mandate by the country. Other dependent organizational structure elements such as storage locations inherit the address attributes from the plant.

Figure 4: Define Foreign Plant with SAP Central Business Configuration

RITA in Action: Sell from Stock Delivered From a Physical Stock Abroad 

Let us look into an example to see how RITA works in logistics: a standard sales order is created from a German sales organization for a customer in Belgium. The goods are shipped from the Belgium stock abroad, the sales order allows the introduction of foreign plant. The sales documents chain shows the correct derivation of tax conditions as required by the foreign plant country. Field tax country / region are automatically derived and propagated on item level. Forms and reports are enabled to fulfill requirements as mandate by the foreign plant country.

Figure 5: Sell from Stock Delivered From a Physical Stock Abroad 

More Information on RITA, Tax Management and SAP S/4HANA Cloud:

• Read the 2302 blog on RITA from Calin and Anthony here
• Tax Management: SAP Innovation Showcase #15, Streamline e-invoicing and statutory reporting for you domestic and foreign tax registrations here (free, registration required)
• Help Portal Product Page for RITA here
• How-To Videos for RITA here 
• SAP Note 2907372
• In-Depth with SAP S/4HANA Training for RITA here
• Presentation incl. Roadmap&FAQ on RITA here
• Finance Collection Blog (roadmap, quarterly release highlights, microlearnings) here
• SAP S/4HANA Cloud Customer Community for Finance here
• SAP S/4HANA PSCC Digital Enablement Wheel here
• Inside SAP S/4HANA Podcast here
• Best practices for SAP S/4HANA Cloud here
• Feature Scope Description here
• Implementation Portal here

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