SAP and 'plants abroad' - When to Use

Page 2 of 4: When to Use

When to Use "Plants Abroad"

The “Plants Abroad” functionality should be utilized under the following circumstances:

• When a company has plant, storage, or warehouse locations in multiple EU countries and is VAT registered in those countries.
• When there are intra-company transfers of goods between plant, storage, or warehouse locations, or in cases of consignment stocks across EU countries.
• When the countries where the company is VAT registered operate with different “tax currencies.”

When plants abroad are implemented, a new field for tax reporting country and currency conversion is available for VAT reporting. With activating plants abroad functionality, you do not need to create separate company codes for European plants or implement manual processes for VAT and Intrastat reporting.

Limitations of Standard SAP VAT Determination

It is essential to recognize that standard SAP VAT determination does not cover all VAT requirements, as not every process flow is accommodated within its standard framework. To fully leverage the available functions, companies must activate the "Plants Abroad" setting.

Tax Determination in SD

In the Sales and Distribution (SD) module, tax determination is calculated based on the key drivers: the "country of the supplying plant" (country of departure) and the "country of the ship-to party" (destination country). Tax classification is determined using the customer master and material master, depending on the country of departure. Tax condition records are maintained about both the country of departure and the destination country.