Withholding Tax on Supplier Invoices with Negative Amounts Using Flexible Service Codes

It is possible to calculate withholding tax on supplier invoices with negative amounts, such as credit notes, when using flexible service codes.

Before you start

These settings are needed to calculate withholding tax on supplier invoices with negative amounts:
  • Parameter '260 Withholding tax using flexible service codes' in 'Accounts Payable - Settings' (APS905/F) is set to 2-'Yes, calculated on positive and negative amounts'.
  • Tax withholding method in 'Supplier. Define Purchase Financial' (CRS624) is set to 2-'Create base/tax at pmt' on applicable suppliers.
Note: The credit note or corrective invoice must be connected to the original invoice for the withholding tax to be updated in the correct year or period, and therefore correctly calculated. The payment date of the original invoice is used to determine which year or period that the credit note or corrective invoice is checked against and updated in.

Calculating negative withholding tax

The calculation of the negative withholding tax is based on the flexible service code settings. Supplier invoices with negative amounts can be paid in 'Suppl Payment. Enter Manual' (APS120), or included in a payment proposal in 'Suppl Payment Proposal. Create' (APS130). This table shows how the withholding tax calculation in (APS120) or (APS130) varies depending on the limit type selected for the flexible service code:

Limit type Flexible service codes on yearly or periodic level Flexible service codes on invoice level Example for flexible service codes on invoice level
0-'No limit' Negative withholding tax is calculated on the full calculation base of the invoice Negative withholding tax is calculated on the full calculation base of the invoice  
1-'Upper limit' Negative withholding tax is calculated on accumulated amounts below the upper limit. Negative withholding tax is calculated on the full calculation base if the invoice calculation base amount is greater than the inverted upper limit amount. A negative invoice of -5,000 is paid, and the upper limit is set to 10,000. Since the invoice amount is negative, the upper limit is treated as -10,000, and since -5,000 is larger than -10,000, negative withholding tax is calculated.
2-'Lower limit' Negative withholding tax is calculated on accumulated amounts above the lower limit. Negative withholding tax is calculated on the full calculation base if the invoice calculation base amount is lower than the inverted upper limit amount. A negative invoice of -15,000 is paid, and the lower limit is set to 10,000. Since the invoice amount is negative, the upper limit is treated as -10,000, and since -15,000 is lower than -10,000, negative withholding tax is calculated.
3-'Between limits' Negative withholding tax is calculated on accumulated amounts according to the lower limit and limits defined in 'Flexible Service Code. Open Limits' (CRS666). Negative withholding tax is calculated on the full calculation base according to the defined limits if the invoice calculation base amount is lower than the inverted upper limit amount. A negative invoice of -15,000 is paid, and the lower limit is set to 10,000. Since the invoice amount is negative, the upper limit is treated as -10,000, and since -15,000 is lower than -10,000, negative withholding tax is calculated.