VAT book - overview

This functionality is specific for Italy.

Italian law requires companies to prepare and submit a VAT book and a VAT liquidation report.

The VAT book is a legal report of all value added tax (VAT) transactions of a company, in date sequence. The transactions can be grouped by tax articles, which typically group transactions that have the same tax percentage.

In addition to the VAT book, rather than the VAT declaration, companies must periodically submit a VAT liquidation report which shows the net VAT amount payable to the tax authorities for the report period. The liquidated VAT amount is the result of the VAT on purchases minus the VAT on sales. If the result is a negative amount, the amount must be paid to the tax authorities. If the result is a positive amount, the amount is carried over as a credit amount to the next VAT book period.

In a multicompany structure, you can set up the VAT book and generate the VAT book reports for the individual financial companies. LN calculates and prints the VAT book amounts in the financial company's local currency. If you have printed the VAT book for all the companies of a financial company group and all the companies use the same local currency, you can print the consolidated VAT book for the group company.

VAT book amounts

The following VAT book amounts require an explanation:

• Intracommunity purchase VAT

  The VAT amounts on intracommunity purchases must be offset on the VAT book reports by printing the VAT book for intracommunity purchases twice: as a purchase VAT book and as a sales VAT book. To ensure that the VAT amount is not added to the open entry amount, and that the amount is automatically reversed in the general ledger, use a tax code of the Shifted type for intracommunity purchase transactions.

• Deferred VAT

  Deferred VAT is listed separately on the VAT book report. Deferred VAT, also called suspended VAT, is registered using tax codes of the On Payments type.

  The VAT amount of invoices to which deferred VAT applies must be included in the VAT liquidation report of the tax period in which the VAT is collected or paid. However, in the VAT book report, deferred VAT must be reported in the invoice’s tax period.

• Non-deductible VAT

  Non-deductible VAT is similar to expensed purchase tax. For non-deductible VAT, select the Expense Purchase Tax check box for the tax code in the Tax Code by Country (tcmcs0136s000) session.

  If a VAT book is linked to the transaction type of cost invoices, the non-deductible VAT posting are made to the cost account you specify instead of to the default tax account. For details, refer to Expense purchase tax

  If the VAT on a purchase invoice is partially deductible, you must use a multiple tax code to split the VAT amount into a deductible part and a non-deductible part.

• Inter-company postings

  In a multicompany structure, the invoice lines of a sales invoice can be posted to a financial company other than the financial company in which the invoice was created. If the lines contain tax, the finalized tax transaction is posted in the source company.

  No tax can be registered for intercompany journal vouchers. Therefore, intercompany postings have no effect on the sequence checks in the destination company, because no tax is involved. However, the destination company’s transaction type for the intercompany relations must not be linked to a VAT book. Otherwise, these transactions are subject to all VAT book-related checks, and VAT book-related checks can block inter-company transactions.

VAT liquidation amounts

The VAT liquidation report amountsThe VAT liquidation report shows the following amounts:

• VAT Payable/Recoverable from previous year

  The VAT amount carried over from the previous period.

• VAT To Be Liquidated

  The amount payable to or claimable from the government.

• Collected Deferred VAT

  The sum of all bank transactions in the Tax Analysis (tfglf110) table related to sales invoices and sales credit notes for the selected period, on which value added tax was paid.

• Paid Deferred VAT

  The sum of all bank transactions in the Tax Analysis (tfglf110) table related to purchase invoices and purchase credit notes for the selected period, on which value added tax was paid.

• Previous Year Credit Used in the Period

  The amount you claim form the government.

• VAT Payable/Recoverable

  The total VAT To Be Liquidated minus the Collected Deferred VAT plus the Paid Deferred VAT minus the Previous Year Credit Used in the Period amount.