Hi,

What is the purpose of recording reverse tax in sales point? When invoice is raise you instruct your customer to apply reverse charge. That means you don't record VAT in sales invoice. In IFS side, you can use zero VAT code or Calculated VAT code. If you fetch this transaction to tax ledger, you can see that only tax base is recognized. You might need it for EU sales list.

Reverse charge is applied by your customer when the supplier invoice recorded. IFS supports Calculated Tax type to handle the Reverse charge in supplier invoice. It will work same as you expected (Disbursed and Recieved transactions are recorded via IP10 and IP9 postings). Finally the real tax is reported when the goods are sold to end customer. Then, VAT will be applied.

Have I misunderstood the requirement or is this a new requirement in SPAIN?

Best Regards 

Eranda

Hello Eranda,

In Italy, when you sell to public institutions you have to use a reverse charge mechanism for VAT (VAT is considered to be paid directly by the customer to the state budget).

The split payment accounting schema is valid for the sale of goods and services rendered to the Public Administration. The split payment mechanism transfers the tax payment obligation to the Public Administration who are obligated to pay only the taxable base to the supplier. The VAT is credited to a specific reserved account. 

So, when posting the invoice, the reversing sales tax transactions with relevant tax codes are posted to eliminate the tax being accrued. 

Thanks a lot,

Regards.

Hi,

Now I understood. You are referring to the split payment scenario. If I remember correctly, the concept was introduced couple of years back by Polish law. We had a challenge of handling this in Core solution. So, the requirement was moved to the Global Extension. If I am correct the split payment functionality is available in PL localization. But, I am not sure whether the same functionality is available in Italy localization. 

@Chirantha Can you remember this?

Best Regards

Eranda

Hi,

You are correct Ernada! I can add some more information...

Split payment is supported by dedicated functionalities both in Poland and Italy. However, both of these functionalities are available only in respective GET extensions. 

Even though it is conceptually similar, how this is operated in Italy and Poland has some differences. 

In Italy, it is basically supported by connecting with standard withholding tax , backed by tax ledger functionalities for spilt payment tax reporting. 

The posting created with WHT is considered as a claim for a seller hence, its direction is reported as “ Tax disbursed”. Your sales transaction would be reported as “ Tax disbursed” . therefore, you get a possibility of reporting both by having correct basic data in the core version too.

As you know, Italy has some specific tax reporting requirements, therefore it should be supported separately and that had been in GET.

Hope this would help you in some way.

Best Regards,

Chirantha.

Thanks to both @Chirantha & @Eranda