Calculated Tax in Travel Expense Module

Hi Mike.  I found the following information which includes a workaround.  Please review the following and advise if you have any questions.

In IFS Expense Management (TRVEXP), the inability to process Calculated Tax (Reverse Charge VAT) directly on travel expense sheets is a known functional design limitation of the standard Travel Expense posting engine.

Root Cause: Why Calculated Tax Does Not Post in TRVEXP

1. Posting Control Architecture:

   • Expense Vouchers (E-vouchers) generated from authorized expense sheets rely strictly on Travel Expense Posting Controls:

     • TX1: Travel Expenses (Debit / Expense Account)

     • TX2: Travel Expense Tax (Debit / Input Recoverable VAT)

     • TX3: Travel Expense Employee Claims (Credit / Payable to Employee)

   • TRVEXP does not have posting types equivalent to IP9 (Tax Received, Calculated) and IP10 (Tax Disbursed, Calculated), which exist only in the INVOIC / PAYLED / PURAP posting frameworks.

2. Calculated Tax Engine Execution:

   • When a Tax Code defined as Calculated Tax (Reverse Charge) is assigned to an Expense Code in Expense Rule, the voucher posting routine for Travel Expenses does not invoke the calculated tax posting logic.

   • As a result, no debit/credit tax voucher lines are generated, and no records are written to the Tax Ledger (Tax Transactions view).

Recommended Workarounds & Best Practices

1. Route Cross-Border / EU Service Expenses via Supplier Invoices (INVOIC)

For business expenses that trigger EU Reverse Charge VAT (e.g., software subscriptions, foreign online services, or cross-border vendor invoices issued without tax):

• Process through Manual Supplier Invoice / Instant Invoice instead of employee expense sheets.

• Set up the vendor or employee as a Supplier in INVOIC.

• Applying the calculated tax code here triggers posting controls IP9 and IP10, properly populating the Tax Transactions table for official EU VAT reporting.

2. Manual Tax Transaction / Journal Voucher Adjustment

If expenses must remain on employee expense sheets:

• Register the expense line using a 0% Tax Code or non-calculated tax code so the employee reimbursement amount (TX3) is accurate.

• Periodically (e.g., monthly during VAT closing), create a Manual Voucher (using a Voucher Type enabled for Tax Accounting) or a Manual Tax Ledger Entry to record the reverse charge VAT:

  • Debit: Tax Disbursed (Input Tax)

  • Credit: Tax Received (Output Tax)

• Include the calculated Tax Code on the manual voucher lines so that transactions register in the Tax Transactions view for VAT declaration.

3. AP / Supplier Expense Clearing Route

• Post employee expense claims to an AP Clearing account via TX3.

• Settle employee reimbursement through Accounts Payable (AP) via Supplier Invoices, where calculated tax rules (IP9/IP10) can be applied during invoice entry.

Summary

Because TRVEXP is designed primarily for direct employee out-of-pocket expenses and recoverable input VAT (TX2), transactions requiring Reverse Charge VAT must be handled either via Supplier Invoicing or through Manual Tax Ledger Adjustments for EU VAT compliance.

Thanks!  Jane

Hi ​@Jane Perry,

Thank you very much for the detailed explanation and for taking the time to look into it.

That also matches what I've been seeing in my testing. However, I'm hoping there is a more automated solution than the suggested workarounds.

The goal is to have the calculated tax handled automatically when an expense sheet is posted, so the tax voucher lines and Tax Transactions are created without requiring manual voucher entries during the month end closing process. For EU customers using reverse charge VAT, having to handle this manually every month adds a significant amount of administrative work and increases the risk of errors.

I'm interested to know if anyone has found a way to automate this in standard IFS, or whether this is simply a current product limitation that requires an enhancement request.

Thanks again for your input!

Hi Mike.  This is the additional information I found.  I believe the reference noted in this response is our conversations.  Please review and advise if you have other questions and/or feel free to enter an enhancement request.  Thanks!  Jane

Based on both the available IFS documentation and a very recent IFS Community discussion on this exact topic, this appears to be a current product limitation in standard IFS Travel Expense (TRVEXP) rather than a configuration gap. [IFS Cloud...es and VAT | Word], [community.ifs.com]

What the documentation shows

The Travel Expense module supports:

• Defining VAT percentages or default tax lines on Expense Codes.
• Automatic calculation of tax amounts on expense lines.
• Creation of GL postings and Tax Ledger entries during expense sheet authorization. [IFS Cloud...es and VAT | Word], [IFS Cloud...Management | PowerPoint]

However, the documentation only references Travel Expense posting controls such as the travel expense tax posting (TX2). It does not describe calculated-tax posting logic equivalent to supplier invoice processing. [IFS Cloud...Management | PowerPoint]

Why Reverse Charge VAT does not appear to work

In the recent IFS Community discussion, the issue described matches your scenario exactly:

• A Calculated Tax tax code was assigned to a Travel Expense expense code.
• Expense sheets posted successfully.
• No calculated tax voucher lines were generated.
• No Tax Transactions/Tax Ledger transactions were created for the reverse-charge VAT amounts. [community.ifs.com]

The explanation provided was that Travel Expense voucher generation only uses the Travel Expense posting framework (TX1/TX2/TX3). Unlike Supplier Invoicing, it does not support the calculated-tax posting controls used for reverse-charge VAT processing (such as IP9/IP10 in Supplier Invoice handling). As a result, the calculated-tax engine is not invoked during Travel Expense posting. [community.ifs.com], [docs.ifs.com]

Practical implication

For EU organizations using reverse-charge VAT:

• Recoverable VAT may be posted through TX2.
• The self-assessed output/input VAT entries required for reverse-charge reporting are not generated automatically from Travel Expenses.
• Tax Transactions needed for VAT reporting are therefore not automatically created. [community.ifs.com]

Current workarounds

From what I could find, customers typically use one of the following approaches:

1. Manual month-end journal entries for reverse-charge VAT.
2. Custom Event Actions/Automation to generate the required accounting entries.
3. Customization or extension of the Travel Expense posting process.
4. Submit an Enhancement Request to have calculated-tax processing in TRVEXP aligned with other finance modules. [community.ifs.com]

"Calculated Tax (Reverse Charge VAT) is not currently processed automatically by the standard Travel Expense posting engine. While tax amounts can be calculated on expense lines, the system does not generate the corresponding calculated-tax voucher entries or Tax Transactions required for reverse-charge VAT reporting. Customers typically handle this through manual journals or customizations. If automatic processing is required, an enhancement request should be raised with IFS."

Sources