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Author's profile photo Ganna Hrivnakova

Reverse Charge VAT in SAP Business One

Company supplying products or services has to  issue an invoice to its customer with the value-added tax (VAT) and subsequently forwards the VAT amount to the tax office. In the reverse charge procedure VAT liability is shifted from the supplier to the recipient of the goods/services. Cases where this procedure can be applied is described in the legal acts of every country. The common way for this procedure application in B2B operations is that Supplier issues the Invoice with Net amount only and Receiver pays VAT to the tax authorities and claims it as input tax (in case when there are no legal exceptions).

Let us look how this procedure can be applied in SAP Business One.

So, you need to issue the invoice to your customer with applying the reverse charge procedure. Here How it looks like in SAP Business One:

You can see that in the line with Reverse Charge the Tax Amount is zero. However that Tax Code is the same. Tick on the Reverse Charge for the second line  and check the layout that you are going to send to your customer:

and the report:

It is simple, isn’t it?

Please, be aware that in case you use the Reverse Charge feature you need to have Federal Tax ID filled in the Invoice as part of the legal requirement:

 In case it is not filled you will receive an error: “Federal Tax ID” must contain a value when “Reverse Charge” is selected.

Field is automatically filled out with value in the Business Partner Master Data. I would recommend using the already described feature about VAT number verification in SAP Business One shared here earlier. So you can be sure that the Invoice you are issuing is correct and answers all legal requirements.

The feature was released in SAP Business One in version 10.0 FP2108 with the Note Reverse Charges for A/R Marketing Documents and Nondeductible Tax Codes

I hope you find this information helpful and I’m looking forward to your feedback in the comments section below. To receive notifications about new blog posts, please follow my profile.

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