Configuring M3 Business Engine for VAT Management

This document presents an overview of the process for setting up the management of value-added tax (VAT) in the standard solution of M3 Business Engine. The document does not cover country-specific tax modifications.

Outcome

With this setup, M3 Business Engine calculates and proposes the VAT values to record when the company creates orders and records invoices. Use the VAT report generator 'VAT Run. Open' (TXS100) to create VAT declarations or simulations, or to check the VAT history.

Before you start

Workflow

  1. Prepare division for VAT

    1. Define basic VAT values in (MNS100).

      To enable M3 Business Engine to identify taxable transactions, define the basic VAT values per division in 'Company. Connect Division' (MNS100).

      Parameters to set

      Field

      Field description

      Country

      The field indicates the country code of the division.

      Tax method

      The field indicates whether VAT or sales tax is the basic tax in M3 Business Engine.

      Alternatives

      1 = VAT applies.

      4 = M3 Business Engine calculates VAT on supplier invoices whereas the third-party product Vertex calculates sales tax on customer invoices.

      If you select tax method 1, M3 Business Engine displays fields for VAT codes on panels when you create customer orders, service orders, maintenance customer orders, rental agreements, and purchase orders and when you invoice orders. M3 Business Engine also displays the VAT field when you work in these modules in Finance Management: Accounts Payable, Accounts Receivable, Fixed Assets, General Ledger, Report Generator, Tax Management, and Time Accounting. If you select tax method 4, fields for VAT codes are visible on panels when you create purchase orders and record supplier invoices.

      VAT registration number

      The field indicates the VAT registration number of the company for the country of this division.

    2. Define country-specific VAT values in (CRS045).

      Define the values listed in the following table in 'Country. Open' (CRS045/E) for all countries where VAT applies.

      Parameters to set

      M3 Business Engine uses a replacement solution involving fiscal representatives in 'Fiscal Representation. Open' (TXS030) instead.

      Field

      Field description

      Create Intrastat or Extrastat

      In the context of VAT management, this field indicates whether the country is a member state of the European Union (EU).

      Alternatives

      0 = Do not create trade statistics transactions

      1 = Create Intrastat transactions

      2 = Create Extrastat transactions

      If you select alternative 0, M3 Business Engine regards the country as not being an EU member state. If you select alternative 1 or 2, the country is considered an EU member state. M3 Business Engine uses this value to determine whether to calculate VAT, based on the country of the parties of the transaction.

      Check digit method

      The field indicates which check digit algorithm to use to validate VAT registration numbers for the country.

      VAT on cash discount

      The check box indicates whether to calculate VAT on settlement discounts when you create customer invoices and supplier invoices. A settlement discount is an amount deducted from the selling price for cash or early payment of an invoice to serve as an incentive to accelerate payment and improve cash flow for a business. Unlike the application of cash discounts, you always deduct a settlement discount from the invoice amount and record it separately when you create an invoice, since we assume that customers always accept the discounts offered.

      If you select this check box, M3 Business Engine automatically deducts the VAT calculated for the settlement discount when you create an invoice. For example, a customer invoice of EUR 1,000 offers a settlement discount of EUR 100. The VAT of 10% that is calculated based on the entire invoice amount would be EUR 200. However, M3 Business Engine automatically deducts the VAT for the settlement discount – EUR 2 – from the total VAT amount, resulting in a VAT charge of EUR 198.

      VAT registration number

      The field indicates the VAT registration number of the company that applies for the country of this division.

    3. Define fiscal representatives in (TXS030).

      Define the division's fiscal representatives in 'Fiscal Representation. Open' (TXS030).

      Generally, a fiscal representative is a local resident party that accepts joint liability for taxes payable by a company in another country. In M3 Business Engine, a fiscal representative is a physical or fictitious warehouse with a separate VAT registration number located in a different EU member state than the division to which it belongs.

      Fiscal representatives are used to enable M3 to retrieve correct VAT registration numbers automatically so that correct VAT is charged in international trade (domestic VAT, EU VAT, or no VAT at all). Also, fiscal representatives enable M3 to create internal invoice transactions between the fiscal representative and another warehouse within the same division so that deliveries between the warehouses can be included in Intrastat reporting and the EU sales report.

      For detailed information, see Fiscal Representatives in M3 and Their Impact on VAT Calculation and Internal Invoicing.

      Parameters

      Field

      Field description

      Fiscal representative country

      The field indicates the country code of the fiscal representative. You can leave this field blank if the purpose is to register a fiscal representative for a ship-via address only. See the field description Via Country below.

      State

      The field indicates the area or state of the fiscal representative. Usually, the only European case when the state is a required parameter is when the fiscal representative is located in Monaco.

      Country of delivering warehouse

      The field indicates the country of the physical or fictitious warehouse from which goods are delivered.

      Warehouse

      The field indicates the physical or fictitious warehouse from which goods are delivered. The warehouse must be in the same country selected in the field 'Country of delivering warehouse'.

      Use this field when the company has more than one warehouse and does not want to use the same fiscal representative for all warehouses. For example, a company has two warehouses, one in the same division as the selling facility and one in another division. The company does not want to use the fiscal representative when delivering goods from its own warehouse, only when delivering the goods from the warehouse in the other division. As part of the VAT decision, M3 Business Engine checks the delivering warehouse ID on the order against (TXS030). There will only be a match if there is a fiscal representative with this warehouse ID.

      Via country

      The field indicates the country of a ship-via address. This field is applicable if the company is incorporated outside the EU but registered for VAT in the EU. The purpose of the ship-via address is to enable such a company to comply with the statutory requirements to report VAT, EU sales, and Intrastat. The company must have a "blank" fiscal representative registered for each country through which goods, intended for European customers, initially enter the EU market. You can leave the values in the fields listed above blank when registering this type of fiscal representatives.

      The via country of the fiscal representative is considered as the base country in the VAT decision. The only exception is when there is a fiscal representative with the same country as the customer. In such a scenario, the country of the fiscal representative always overrules the via country and is used as the base country of the transaction. For details and examples, see The M3 Tax Engine.

      When you place an order, M3 Business Engine automatically matches the country of the ship-via address against (TXS030) as part of the VAT decision.

      Internal customer

      The field indicates the internal customer – the receiving party – from whom the country code and VAT registration number are retrieved for VAT calculations and internal and external invoicing. The country of the internal customer must be the same as the country of the fiscal representative.

      Internal supplier

      As above, but referring to the supplier in the delivering division instead.

    4. Create VAT codes in (CRS030).

      Define VAT codes at the company level in 'VAT Code. Open' (CRS030) and connect the rates to apply per country and state from specific dates at the division level in 'VAT Rate. Open' (CRS031). Also, set the VAT code to 0, meaning no VAT will be charged.

      A VAT code is the component that determines which VAT method and VAT rate to apply for a specific type of business transaction.

      Parameters

      See Create VAT Codes for VAT Transaction Entry and Reporting.

  2. Define setup at item/warehouse level

    1. Define the retrieval of VAT registration number for warehouse in 'Warehouse. Open' (MMS005).

      For each applicable warehouse, delivering or receiving, define VAT-related values in (MMS005).

      Parameters

      Field

      Field description

      Country, Area, State

      The field indicates the country code and area/state of the country where the warehouse is located.

      Customer, Supplier

      The field indicates the internal customer or supplier from whom M3 Business Engine retrieves the VAT registration number.

    2. Select VAT codes for items in (MMS001).

      Specify the default VAT codes for purchasing and selling a specific item on 'Item. Open' (MMS001/G). For items that are free of VAT, specify VAT code 0 (no VAT).

      On the customer side, M3 Business Engine only uses the VAT code in (MMS001) for non-stock items. On the supplier side, the VAT code applied is either the one in (MMS001) or the one in (MMS002), depending on your selection in the 'Tax applicable' field for the supplier. The VAT code of an item can also differ depending on whether you purchase or sell the item.

    3. Select VAT codes for item warehouses in (MMS002).

      Specify the default VAT codes for purchasing and sales for the relevant combinations of item and warehouse on 'Item. Connect Warehouse' (MMS002/I).

      VAT codes are specified in this program because the same item can have different classifications in different countries. In country A for instance, an item can be a full VAT item, and in country B a reduced VAT item. The VAT code of an item can also be different depending on whether you purchase or sell the item. M3 Business Engine does not automatically default the VAT codes selected for the item in (MMS001) to (MMS002).

      Note that since you select the VAT code to use on the I panel, you may need to change your panel sequence.

  3. Set up the financial system

    1. Define VAT settings for General Ledger in (CRS750).

      Define basic VAT settings for the processing of VAT in the financial system on 'Settings – General Ledger' (CRS750/F).

      Parameters

      Field

      Field description

      VAT report from date

      The field indicates the date from which transactions are selected for VAT reporting in 'VAT Run. Open' (TXS100).

      VAT check online

      The check box indicates whether to check the calculated VAT against the recorded VAT for each VAT code when you specify accounting lines and record VAT manually for a voucher in (GLS120). (GLS120) is the coding panel accessed from (APS100), (ARS100), (ARS120), (FAS130), and (GLS100). The VAT report created in (TXS100) displays any differences between calculated and recorded VAT. Ideally, there should be no differences. The online check alerts you when you specify a voucher whenever there is a difference, for example, due to incorrect VAT amounts specified or due to usage of different VAT codes on the VAT base transaction and the VAT transaction itself. The online warning, apart from alerting you about any differences, also enables you to specify a comment to print on the VAT report for auditing purposes.

      Accepted VAT deviation

      The field indicates the maximum deviation allowed between the calculated and the recorded VAT before you receive an online warning during the automatic online VAT check. M3 Business Engine only applies the value in this field if you selected the 'VAT check online' check box.

      VAT date type

      The field indicates which date to use as the basis for the VAT reporting: invoice date, accounting date, or delivery date. For details, see Enable General Ledger Management.

      VAT printout

      The field indicates how to manage VAT amounts in a local currency for supplier invoices and customer invoices in a foreign currency.

      Alternatives

      0 = M3 Business Engine neither displays VAT amounts in local currency in (APS100), nor does it print these VAT amounts on customer invoices. M3 Business Engine calculates and records the VAT in local currency automatically using the exchange rate of the invoice currency.

      1 = M3 Business Engine does not display any fields for VAT amounts in local currency during entry of supplier invoices on (APS100/F). However, M3 Business Engine does print VAT amounts in local currency on customer invoices as additional information.

      2 = M3 Business Engine automatically calculates the VAT amount in local currency based on the VAT code of the supplier and the exchange rate of the invoice currency during entry of supplier invoices in (APS100). M3 Business Engine proposes the amount on the E panel, allowing the user to change it, but does not print VAT amounts in local currency on customer invoices.

      3 = As alternative 2 with the addition that M3 Business Engine does print VAT amounts in local currency on customer invoices as additional information.

      For all alternatives, M3 Business Engine automatically records any differences that occur between VAT in foreign currency and VAT in local currency as an exchange rate gain or loss.

    2. Define VAT values for FAM functions in (CRS406).

      Configure detail records for FAM functions in 'FAM Function. Open Details' (CRS406).

      FAM functions serve as transaction entry templates in Finance Management. The settings determine whether and how VAT is processed automatically when recording transactions and creating invoices. For a list of the programs in which each one of the FAM functions listed below are applied, see Using FAM Functions to Facilitate Transaction Entry.

      Parameters

      Field

      Field description

      VAT calculation method

      The field indicates the amount to use as the base for the VAT calculation:

      1 = Net amount

      2 = Gross amount

      This value is only applicable to the entry of supplier invoices where the supplier's specification on the invoice determines how to record the VAT. The gross amount is always the VAT base at the payment of supplier invoices. The VAT base is always the net amount on customer invoices.

      Applicable FAM Functions

      AP10 (Manual entry of supplier invoices); AP60 (Supplier payment by single check); GL01 (Manual entry of journal vouchers and bank transactions), enabling the company to base VAT on the net amount or gross amount of journal voucher lines in (GLS110) and (GLS120).

      Auto VAT accounting

      The field indicates the extent to which M3 Business Engine calculates and records VAT automatically when you create invoices and record payments. The available alternatives depend on the FAM function used.

      Applicable FAM Functions

      AP10 (Manual entry of supplier invoices); AP60 (Supplier payment by single check); AR10 (Specifying customer invoice records); AR20 (Manually creating customer invoices); CA10 (Entry of internal journal vouchers for manual adjustments); GL01 (Manual entry of journal vouchers and bank transactions); GL30 (Updating the General Ledger with petty cash transactions); MF10 (Cross-division voucher); TA20 (Invoicing of external time accounting transactions).

      If you match the invoice to a purchase order or to goods receipt transactions, you must select alternative 0 or 4, since M3 Business Engine does not display a coding panel during invoice matching.

      VAT method for cash discount

      The field indicates how to process VAT on cash discounts when you record payments from customers and suppliers.

      Alternatives

      1 = M3 Business Engine records the cash discount and the VAT together as one transaction based on the accounting rule representing the cash discount.

      2 = M3 Business Engine records the portion of the cash discount amount that is VAT separately using the same accounting string that it applied for the VAT transaction based on the main VAT code of the invoice. M3 Business Engine records the remaining amount based on the accounting rule representing the cash discount. Do not use this method for cash discount based on the net amount.

      3 = M3 Business Engine automatically calculates the VAT portion of the cash discount and records it separately for each VAT code. This method is preferable when many VAT codes apply. The proportional relationship between the amount of the respective VAT code and the total invoice amount is used as the percentage in this calculation. Do not use this method for cash discount based on the net amount. If you select alternative 3 for FAM functions AR30, AR40 or AR80, proceed with task 10; otherwise proceed with task 11. Note that this method only works with tax method 1 = 'VAT applies' is selected for the division in (MNS100).

      Applicable FAM Functions

      AP20

      Manual entry of supplier payments made

      AP30

      Supplier payment by check

      AP31

      Supplier payment by electronic bank transfer

      AP32

      Supplier payment by manual bank transfer

      AP33

      Supplier payment by draft

      AP34

      Confirmation and reconciliation of collected drafts

      AP35

      Supplier payment by direct debiting

      AP72

      Updating Accounts Payable with account entries for supplier drafts without acceptance

      AR30

      Manual entry of customer payments

      AR40

      Entry of receipt orders in batch file

      AR72

      Generating account entries for drafts without acceptance

      AR80

      Reconciling customer payments confirmed by bank

      OP35

      Invoice payments

    3. Define transfer of CO invoicing transactions to FIM in (CRS722).

      If you selected the 'Compress FIM transactions' check box on 'Settings – Customer Order Invoicing' (CRS722/E), always select the 'Separate voucher number' check box as well if all of these conditions apply:

      M3 Business Engine should recalculate VAT based on the cash discount, that is, if you selected alternative 3 in the 'VAT method for cash discount' field for FAM functions AR30, AR40 or AR80.

      You selected cash discount method 1 (Gross method) on (CRS722/E).

      You selected cash discount method 1 (Gross method) on (CRS722/E).

      Note: These settings will prevent the mix-up of different VAT registration numbers from different deliveries and customers, something that would result in incorrect values for customer order invoicing in the VAT reports.
    4. Define VAT exceptions in (TXS020).

      As described in Define VAT Exceptions, define the following in 'VAT Exception. Open' (TXS020): 1) Exemption texts per customer language in all scenarios where a VAT code with zero VAT is applied; and 2) rules for automatic replacement of VAT codes depending on scenario.

      It is a legal requirement within the EU to print exemption texts on customer invoices that relate to VAT exempt or zero-rated goods. The definition of replacement VAT codes ensures the correct application of VAT code on an order line in complex VAT scenarios. For details, see VAT Exemption Texts and Automated Replacement of VAT Codes in M3.

    5. Select VAT codes for Interest Rules in (CRS460).

      Select VAT codes per interest invoicing rule on 'Interest Invoicing Rule. Open' (CRS460/E).

      M3 Business Engine applies these VAT codes to calculate VAT on interest invoice charges and for the total amount of the interest invoice respectively when you create penalty interest invoices in 'Interest Invoice. Open' (ARS160).

    6. Define accounting rules for VAT in (CRS395).

      Define accounting rules for automatic generation of VAT transactions in 'Accounting Rule. Set' (CRS395).

      Accounting types

      These VAT accounting types are available:

      Accounting types

      Description

      111

      VAT payable 1

      112

      VAT payable 2

      113

      Suspense account for VAT payable 1

      114

      Suspense account for VAT payable 2

      211

      VAT receivable 1

      212

      VAT receivable 2

      213

      Suspense account for VAT receivable 1

      214

      Suspense account for VAT receivable 2

      Accounting events

      Accounting events that can generate VAT transactions automatically are listed in this table:

      Event

      Event description

      AP10

      Manual entry of supplier invoices

      AP20

      Manually recorded supplier payments

      AP30

      Supplier payments by check

      AP31

      Supplier payments by EDI

      AP32

      Supplier payments by manual bank transfer

      AP33

      Supplier payments by draft

      AP34

      Confirmation of draft payment

      AP35

      Supplier payments by direct debiting

      AP46

      VAT accruals for Goods Received Not Invoiced

      AP50

      Automatically generated supplier invoices

      AP51

      Debit notes

      AR10

      Customer invoices

      AR20

      Manually specified invoices

      AR30

      Manual payments

      AR40

      Automatic payments

      AR50

      Interest invoicing

      AR75

      Bank remittance

      AR80

      Bank reconciliation

      AR95

      Payment plan

      CO20

      Invoicing work orders

      CO30

      Meter-based invoicing

      FA50

      Fixed asset sales

      GL01

      Journal vouchers

      GL30

      Petty cash

      MF01

      Internal invoicing

      OI20

      Invoicing customer orders

      OI30

      Cash payment

      OP20

      Sales tickets and refunds

      OP35

      Invoice payments

      OP40

      Petty cash expenses

      PO20

      Project invoicing

      SO20

      Invoicing

      TA20

      Invoicing

      TX01

      VAT declaration voucher

    7. Register VAT accounts in (CRS630).

      Specify VAT accounts in 'Accounting Identity. Open' (CRS630). Each account must belong to one of these VAT account types:

      1 = VAT payable account

      2 = VAT receivable account

      3 = Account for VAT-generating transactions at sales, used in combination with VAT account type 1

      4 = Account for VAT-generating transactions on purchases, used in combination with VAT account type 2.

      These VAT account types are company-defined accounts for VAT-generating transactions. The purpose of these VAT account types is to enable the company to group and analyze transactions in VAT reports:

      5 and 7 = Account for VAT-generating payables

      6, 8, and 9 = Account for VAT-generating receivables.

      The VAT account type determines whether M3 Business Engine calculates and records VAT automatically at voucher entry. The VAT account type is part of each accounting line together with the VAT code, VAT percentage, base country, and From/To country. You can also use VAT account types as a selection criterion in VAT report templates in 'VAT Report Template. Open' (TXS005). M3 Business Engine automatically calculates VAT for VAT account types 3–9 if you selected alternative 4 in the 'ACR VAT codes' field for the account on (CRS630/G) and specified VAT codes there. When you specify a new account in (CRS630), M3 Business Engine activates a separate table for specifying the applicable VAT codes. When you update an existing account, you activate the table by pressing F4 in the 'ACR VAT codes' field.

  4. Update customers and suppliers

    1. Define VAT values for customers in (CRS610).

      Define the VAT values described below for each applicable customer and payer on 'Customer. Open' (CRS610/J) and in the sub-program 'Customer. Connect Addresses' (OIS002/F).

      M3 Business Engine applies the VAT values of the customer when you create customer invoices and the VAT values of the payer when you record customer payments. For manual write-offs based on accounting options in (ARS110/F), M3 Business Engine applies the VAT values of the customer when you select an accounting option for a specific invoice. If you select an accounting option for the entire voucher instead, M3 Business Engine applies the VAT values of the payer.

      Parameters

      Field

      Field description

      Tax applicable

      The check box indicates whether the customer or payer is subject to VAT. M3 Business Engine proposes the value selected in the 'Tax applicable' field on (CRS610/J) by default when you register a customer order in 'Customer Order. Open' (OIS100), a service order in 'Service Order. Open' (SOS100), and when you update project invoices in 'Project Invoice. Update' (POS480).

      Alternatives

      0 = M3 Business Engine does not record any VAT

      1 = M3 Business Engine records VAT

      Note: The VAT code in the order header does not apply when the 'Tax applicable' code is set to 1, only VAT codes on order lines.

      2 = M3 Business Engine does not record any VAT due to a VAT exemption agreement. However, you must specify a VAT code in the header of a customer order or service order. M3 Business Engine then retrieves the applicable VAT code to the order lines and charges to calculate VAT for VAT reporting. M3 Business Engine prints a text that indicates the VAT exemption agreement on the invoices. This text must be defined in (TXS020) for the VAT code specified on the order header.

      VAT code

      The field indicates the default VAT code.

      You can also select a specific VAT code per standard charge on 'Customer. Connect Charge' (OIS003/E) if there are different VAT rates for charges; you access the program from (CRS610/B).

      VAT registration number (OIS002/F)

      The field indicates the customer's VAT registration number that applies for the delivery address. M3 Business Engine uses the VAT registration number for VAT calculations and the creation of trade statistics transactions.

      VAT registration number (CRS610/J)

      The field indicates the customer's VAT registration number to use when there is no delivery address in (OIS002) so that the default address on (CRS610/E) is selected instead.

    2. Define VAT values for Division-Specific Customers in (MFS610).

      For customers with different VAT registration numbers in different divisions, define these VAT values per division on 'Customer. Open Local Exceptions' (MFS610/E).

      Parameters

      Field

      Field description

      Tax applicable

      The field indicates whether the customer is subject to VAT. See the description of this field above.

      VAT registration number

      The field indicates the customer's VAT registration number M3 Business Engine uses for VAT calculations and the creation of trade statistics transactions when there is no VAT registration number defined for the delivery address.

    3. Register VAT values for suppliers in (CRS624).

      Define VAT values for each applicable supplier and payee on 'Supplier. Open' (CRS620/E) and 'Supplier. Define Purchase & Financial' (CRS624/F).

      If VAT exceptions apply for a specific zone with specific VAT regulations (such as Corsica and Andorra), specify an area/state as well on (CRS620/E). This enables you to define VAT code exceptions based on area or state in (CRS031). M3 Business Engine proposes VAT details when you create purchase orders, specify supplier invoices and record supplier payments. The VAT settings of the supplier are relevant primarily when you record supplier payments manually made in 'Supplier Payment. Enter Manual' (APS120). M3 Business Engine also applies the settings of the supplier for any write-offs you make based on user-defined accounting options for individual invoices in (APS120). However, at write-offs at voucher level in (APS120), M3 Business Engine applies the settings of the payee instead.

      Parameters

      Field

      Field description

      VAT registration number (CRS620/E)

      The field indicates the VAT registration number of the supplier.

      Note: Exceptions to the VAT registration number can be specified in (CRS628).

      Tax applicable (CRS624/F)

      The field indicates whether the supplier is subject to VAT. M3 Business Engine proposes the alternative you selected by default when you create a purchase order.

      Alternatives

      0 = M3 Business Engine does not calculate any VAT.

      1 = M3 Business Engine calculates VAT based on the VAT code for the combination of item and warehouse in 'Item. Connect Warehouse' (MMS002). If there is no VAT code there, M3 Business Engine regards the item as a non-taxable good. If there is no connection between the item itself and a warehouse in (MMS002), M3 Business Engine searches for a VAT code from the item in 'Item. Open' (MMS001) instead.

      2 = M3 Business Engine calculates VAT and retrieves the VAT code to apply using this search path:

      1. The combination of item and warehouse in (MMS002);

      2. The item in (MMS001);

      3. The supplier on (CRS624/F) or 'Supplier. Open/Division' (MFS620/E).

      If there is no VAT code in the first program, the search continues in the following tables.

      VAT code (CRS624/F)

      The field indicates the default VAT code of the supplier. This VAT code is also used for automatically generated supplier invoices in 'Supplier Invoice. Process Automatic' (APS050) if these are not invoice matched.

      Tax registration number (CRS628)

      The field indicates the VAT registration number per country or per country and state and is used to replace the VAT registration number from (CRS620/E) when supplier invoices are specified.

      Note: An exception is valid if the country and state are the same as on the supplier invoice, but also if only the country indicated on the supplier invoice is specified in (CRS628).
    4. Update delivery terms with goods responsibility in (CRS065).

      Review the delivery terms in 'Delivery Terms. Open' (CRS065) to ensure that the goods responsibility selected results in the correct selection of countries involved during the automatic VAT decision.

      Parameters

      Field

      Field description

      Goods responsibility

      The field indicates

      1. when the liability for a delivery is transferred from the supplier to the customer;

      2. which country M3 Business Engine selects as the base country and To country respectively when making VAT decisions.

        This function is limited to customer orders, service orders, and maintenance customer orders.

      Alternatives

      1 = The customer assumes liability when the goods leave the supplier's inventory. In the VAT decision, M3 Business Engine regards the To country and the base country as the same.

      2 = The buyer assumes liability when the goods are received at the customer's transport address. In the VAT decision, M3 Business Engine regards the To country as the same as the country of the ship-via address. If there is no ship-via address, the To country and the customer's delivery address are regarded as the same.

      3 = The customer assumes liability when the goods are received at the customer's final address. In the VAT decision, M3 Business Engine regards the To country as the same as the country of the customer's delivery address.

  5. Define structure of VAT declarations

    1. Create VAT Report Templates in (TXS005).

      Based on the country's specific requirements, create the corresponding templates to use for declaring VAT to the tax authorities, printing VAT history or creating VAT simulations in 'VAT Report Template' (TXS005). See Create Template for VAT Reports.

    2. Design Country-Specific IEC Message for Electronic VAT Declarations using these steps:

      Define the format of the IEC message by checking:

      if the IEC server is able to manage the format;

      if there is an API;

      and if the existing fields are sufficient for the IEC message.

      Write a detailed design to describe the settings required in M3 Business Engine, as well as contain a mapping of each field in the IEC message to the corresponding field in M3 Business Engine.

    3. Select MI transactions per country.

      For electronic VAT reporting, register the MI transactions to use per base country for the IEC message in 'VAT Reporting. Connect MI Transactions' (TXS001). Otherwise, M3 Business Engine will not update the tables used for the MI transactions.

      The purpose of this requirement is to prevent tables that are not used by Infor Enterprise Collaborator in the country of the company from being populated with data. You can also register MI transactions by a combination of base country and VAT report template in case the base country uses more than one MI transaction or VAT report template. The MI transactions available are displayed by selecting F4 in the Transaction field in (TXS001).

      Note: Do not register MI transaction GetHeadInfo (Generic header information used by all IEC mappings) in (TXS001), since the FVATHE table is always updated. For a description of these tables, see the section 'Tables in Electronic Reporting' in the topic 'Reconciling and Declaring VAT'.
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