To adjust tax for deductions

If you create a sales invoice, the tax amount is calculated and posted to the tax ledger account. The tax calculation is based on the invoice amount.

If the payment amount differs from the invoice amount due to a discount, the deduction of late payment surcharges, or payment differences, LN can adjust the tax amount.

To set up tax amounts adjustment, use the following sessions:

  1. CMG Parameters (tfcmg0100s000)
    • Select the Adjust Tax for Deductions check box. LN calculates the tax adjustment amounts based on the discount amount, the deducted late payment surcharge, or the accepted payment difference.
    • In the Ledger Account for Deductions by field, select Tax code to specify the ledger accounts for the tax adjustments for each tax code and country combination or select Financial BP Group to specify the ledger accounts for each financial business partner group.

  2. Depending on your selection, specify the ledger accounts for the tax adjustments in one of the following sessions:

    • Posting Data by Tax Code for Deductions (tfcmg0150m000)
      Specify the ledger accounts for the current financial company.
    • Accounts by Financial BP Group (tfacr0110m100)
      Specify the ledger accounts for the financial business partner group.
  3. In the Posting Data by Bank/Payment Method (tfcmg0146s000) session, select the step at which LN calculates and posts the tax adjustment.
Example

Assume or create a sales invoice with the following details (all amounts are in EUR):

  • Invoice number: ACR20050001
  • Amount : 5000
  • Tax country/code : NL/001
  • Tax amount : 700
  • Late payment surcharge : 100
  • Discount : 200
  • Due date : 10/06/2005

In this example, the tax amount is calculated on the gross amount of EUR 5,000, which includes the late payment surcharge and the discount.

If the invoice is paid before the due date, at the time of receipt you have the following details:

  • Received amount : 4700
  • Late payment surcharge : 100
  • Discount : 200

The business partner only paid EUR 4,700, but, at the time of the invoice, you calculated the tax on the total gross amount (EUR 5,000). This implies that you unnecessarily calculated tax on EUR 300 (the sum of all deductions).

With the Adjust Tax for Deductions field, you can determine whether you want to adjust the tax on the deductions. If you choose to deduct tax, LN creates a reversal entry for the tax on the deductions amount of EUR 300, that was posted at the time of the invoice creation.

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