Indicate import and export during chain transactions

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When more than 2 parties are involved, the VAT treatment depends on the VAT treatment of the prior transactions:

  • ABC (D) transactions involving a supply of goods which are exported to a place outside the EU. In this case, it is important to identify in which part of the chain the export takes place in order to determine the impact on the VAT qualification of the other parties in the chain transaction
  • ABC (D) transactions involving a supply of goods which are imported to a place inside the EU. Again, it is important to identify in which part of the chain the export takes place in order to determine the impact on the VAT qualification of the other parties in the chain transaction

In chain transactions with non EU countries the correct VAT treatment depends on which party is acting as importer or exporter of records. Additional data have to be used to either default the party acting as importer or exporter of records or define this at sales order level.

Import / export transactions ABC transactions

Specific considerations about export/import

  • Define the correct legal partner for VAT
  • Determine the correct ship-to country
  • Differentiate between export/import and out of scope

Below examples explain the difficulties from a VAT automation perspective as standard SAP operates on company level only (see When is Standard SAP (in)sufficient?)

Import scenario

A Dutch Sales organization is selling goods to a French customer. The goods are not is stock and are purchased from a Singapore group company. Transport is by vessel from Singapore to Rotterdam and then by truck to the French customer.

1

To determine the VAT treatment of the supply chain it is essential to know who the importer of records is. Is that the NL sales organization or the FR customer and where will the import takes place (country).

From a VAT point of view the difference for the sales invoice is as follows

Importer of record = NL Sales organization in country NL

  • NL sales organization must invoice as an intra-community supply 0% from the Netherland to France to the French customer
  • Transaction must be reported in Intrastat (dispatches) by NL sales organization
  • Transaction must also be reported on the EC sales list

Importer of record: Customer in France

  • NL sales organization must invoice as an out of scope 0% on the invoice to the French customer as the transaction takes place before any import in Europe
  • There is no Intrastat obligation by NL sales organization

Export scenario

Delivering plant Netherlands owner is Company Y (resident in DE) - Party A Sales organization: Netherlands Company Z (resident in NL) - Party B Customer: Ship-to location Singapore (SG) - Party C. In the situation above it is very important to know who the exporter of records is.

3

From a VAT point of view the difference for the sales invoice is as follows

Exporter of record: Company Z

  • Company Y (resident in Germany) must shift the Dutch VAT 0% (with its Dutch VAT number) on the sales invoice to Company Z
  • Company Z must book on the purchase invoice a self-assessed NL tax code (debit/credit)
  • Company Z must add an export 0% on the sales invoice to the Singapore customer
  • Transaction must be reported by Customer Z in extrastat

Exporter of record: Company Y

  • Company Y must add an export 0% on the sales invoice to Company Z
  • Company Z must book on the purchase invoice an out of scope 0%
  • Company Z must add an out of scope 0% on the sales invoice to the Singapore customer
  • Transaction must be reported by Company Y in extrastat

Written by Richard Cornelisse
 Richard LinkedIn

Richard advises multinational businesses in improving the efficiency and effectiveness of their Indirect Tax Function and Tax Control Framework.

He started his career as a manager at Arthur Andersen and then became an EY partner where he led the indirect tax performance team for Netherlands and Belgium. Currently, he is a managing director of SAP Tax Consultancy Firm.

Richard has over 20 years of experience advising clients on international VAT issues. He is specialized in the tax aspects of financial transformations, shared service center migration, and post-merger integration work.