Negative Withholding Supplier Tax Using Flexible Service Codes

You can 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' on 'Accounts Payable - Settings' (APS905/F) is set to 2-'Yes, calculated on positive and negative amounts' or 3-'Yes, calculated on invoices or payments'.
Tax withholding method in 'Supplier. Define Purchase Financial' (CRS624) is set to 2-'Create base/tax at pmt' on applicable suppliers.

Note: For flexible service codes that are defined for payment reporting level, 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. You can specify the supplier invoices with negative amounts in 'Supplier Invoice. Record' (APS100) or 'Supplier Invoice Batch. Open' (APS450), pay in 'Suppl Payment. Enter Manual' (APS120), or include in a payment proposal in 'Suppl Payment Proposal. Create' (APS130). This table shows how the withholding tax calculation in the aforementioned functions 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 (payment reporting level) or the calculation base per invoice accounting line (invoice reporting level).	Negative withholding tax is calculated on the full calculation base of the invoice (payment reporting level) or the calculation base per invoice accounting line (invoice reporting level).
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 (payment reporting level) or the accumulated calculation base for applicable invoice accounting lines (invoice reporting level) 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 (payment reporting level) or the accumulated calculation base for applicable invoice accounting lines (invoice reporting level) amount is lower than the inverted lower 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 (payment reporting level) or the accumulated calculation base for applicable invoice accounting lines (invoice reporting level) amount is lower than the inverted lower 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.
4-'Date limits'		Negative withholding tax is calculated based on the date range setup defined in 'Flexible Service Code. Open Date Limits' (CRS668) based on the payment date of supplier payment proposal in (APS130), accounting date of payment in (APS120) or invoice date in (APS100), and (APS450).