VAT registration number in Billing (VBRK-STCEG) - inconsistent explanation of standard logic

[Stanislaw_Stefanowski]

The VAT Registration number in the billing document (technical filed VBRK-STCEG) is automatically determined by SAP standard functionality when the billing document is created. This functionality can be configured according to business requirements through customization settings available at:

SPRO -> Sales and Distribution -> Basic Functions -> Taxes -> Maintain Determination of Value-Added Tax registration number

Various rules can be applied for configuring VAT ID determination. These rules allow the VAT ID to be sourced from the Payer, Sold-to party, or Ship-to party data, or so called "priority rule" can be applied. I will not focus on the description of each rule as it's not the purpose of this blog. However, a comprehensive description is available in the performance assistant in SPRO.

In the considered scenario, a standard priority rule is used which works in the following way (according to the system description):

1. If the payer has a VAT ID number and RG <> AG, then the tax number and tax classification are copied from the payer (in this case, the ship-to party is not relevant). The tax number is taken according to the 'tax country of destination'.

2. If 1. does not apply: If the ship-to party has a VAT registration number and the sold-to party does not, tax number and tax classification are copied from the ship-to party.

3. If 2. does not apply: Tax number and tax classification are copied from the sold-to party.

We want to analyze a case where the VAT numbers of the payer and sold-to party are identical, while the ship-to party has a different VAT registration number. According to the outlined rules, it is expected that VBRK-STCEG will be populated with the VAT ID of the sold-to party. This is explained as follows:

• Point 1 does not apply because the VAT ID of the sold-to party and the payer are identical.
• Point 2 does not apply because the sold-to party has a VAT ID (the rule suggests that both conditions must be met : "If the ship-to party has a VAT registration number and the sold-to party does not"). 
• Point 3 is applicable as the sold-to part has VAT ID. 

The description of point 2 suggests, that it does not apply because the sold-to party has a VAT registration number. However, it turns out that standard logic does not work as described. Let's investigate it based on an example in the system.

Note: The data in the this example is fictional. 

As mentioned earlier, sold-to and ship-to party has different VAT IDs in master data:

Yet, when the billing document is created, the VAT ID is read from the ship-to party rather than the sold-to party, contrary to the rules description:

Let's take a closer look at what is behind it. The program logic which fills data in VBRK-STCEG is located in include LV60AA95, form vbrk_vbrp_datentransport:

When we look at the program and find the part of the code responsible for the execution of rule 2, we notice that the logical operator 'OR' is used instead of 'AND'. Consequently, the fact that the sold-to party has a valid VAT ID does not affect the determination logic, and in this case, the VAT ID is taken from the ship-to party's data:

Considering the above, this discrepancy may lead to misunderstandings of SAP's standard logic and can sometimes confuse business users and even consultants. In my professional experience, I have already encountered this issue several times, and usually it was reported by users as a system bug. Hopefully, this post will help others gain a better understanding of VAT ID determination in SAP ECC.

Note: This article does not apply to SAP S/4HANA, where the VAT ID determination logic has been restructured, and the explanation of the rules has been rewritten.