Most of our sales parts are zero-rated for VAT, but we have a few that are standard rate.
Most of our customers are based in the UK, so have their Tax Code set to standard rate in the Customer screen, but we also export to some EU customers, who have their Tax Code set EU rate 0%.
When raising customer orders, the sales part tax code always seems to supercede the customer tax code. This works well when selling zero-rated sales parts. However, when we raise EU customer orders for standard-rated sales parts, this presents a problem because they appear with 20% VAT, when we need to invoice EU customers with zero VAT.
Can anyone suggest a solution?
Many thanks.
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Hi @Jonathan Wilkinson MDT
In order to resolve the issue, you can use enter use Tax Class in Sales part window instead of a particular Tax Code. Here you can define a Tax Codes based on the Delivery Country. In your scenario, in the tax class, you can define tax code for which tax is charged when the goods are sold to UK and when the goods are exported to EU customers, and when you don’t want to charge a Tax for them, you can define a Zero tax Code for those delivery countries.
Once these are in place, when you raise a Customer order, Order line will look at Country where the good are delivered based on the Delivery Address of the Customer Order and the applicable rate will be fetched in based on the delivery country.
I hope this information will help you in resolving your issue, let me know if you need further help.
Kind regards,
Shanuka.
Hi,
The other way to create this would be to set the customer address tax liability to TAX or EXEMPT depending on where the same customer is based.
Then, if the tax liability is TAX - the sales part tax code will be used.
Else, if the tax liability is EXEMPT - the sales part tax code is ignored, and instead, the setup here will be applied. The benefit of using this setup is that it is based on each combination of WHERE TO (customer address) and WHERE FROM (supply country).
In the below example, for the customer address country (not visible in screenshot), when goods are supplier from our site in UK, the liability is exempt and all sales will use tax code N and ignore the tax code on the part.
