Applying VAT Split in Payments in Contract Accounting

[cheng-hua_huang]

In this blog post we introduce the split payment of VAT mechanism in Contract Accounting (FI-CA). The VAT split in this blog post means that during the payment run, the information of VAT amounts is split from the invoice amounts in the outgoing payment file. That is, there is only one payment, together with the VAT and invoice amount.

Note: If you want to split the VAT payment and the invoice payment and post VAT amount on a separate bank clearing account (In other words, there are two payments in total), you must set up the bank clearing account for posting area 1061. (Transaction: FQC0)

By applying the VAT split function, the VAT-relevant payment becomes more visible and enables the house banks to send this VAT amount directly to the tax authority. This feature improves the transparency and efficiency of processing payments.

Business Scenario

When you apply the VAT split feature, the VAT amount is listed separately in the payment file. When the house bank receives the payment file, it pays the VAT amount directly to the tax authority.

Processing outgoing with VAT split follows the standard payment processing as the picture above.

1. You first create and post contract accounting documents.
2. You execute payment runs. In this step the system carries out several actions, including selecting payment methods and bank details that you have defined in the customizing activity.
3. After the payment runs, a payment file is created. You can download the payment file as a .txt, or .xml file based on the payment format that you have assigned to payment methods for outgoing payments.
   The VAT split is carried out in this step when the payment file is generated. The VAT amount is listed separately. See the example and the line marked in yellow below.
   
   
4. You send the payment file to the payee’s house bank.
5. Payee’s house bank then sends the VAT amount directly to the tax authority. Later on, it sends you back a statement with the payment status.
6. Finally, you upload the received bank statement file.

Prerequisites

Before processing the payment with the VAT split feature, you must complete the configuration steps. In this blog post we introduce the configuration in SAP S/4HANA Cloud Private Edition and SAP S/4HANA Cloud Public Edition.

SAP S/4HANA Cloud Public Edition

The following two activities are standard steps for processing payments.

1. Define Payment Methods (ID: 101952): Define one or more country/region payment methods for outgoing payments.
2. Define Specifications for Paying Company Code (ID: 101251): Select company code used for automatic payment transactions and assign the payment methods.

To apply the VAT split for processing payments, you must complete the settings as follows. In the following print screen, we take Poland as an example.

1. Define Payment Methods for VAT Split in Contract Accounting (ID: 106940): Assign a payment method to the country/region key for VAT split.
   • Enter the country/region key and select Apply.
     
   • Select a payment method and save.
2. Business partner master data setting:
   
   • Search for the Maintain Business Partner app.
   • Enter the business partner.
   • In the Display in BP Role, select Contract Partner.
   • In the Country-Specific Data (FI-CA), enter a valid time for the VAT split and select 2-Split Enabled as the VAT Payment Type.

SAP S/4HANA Cloud Private Edition

The following two activities are standards steps for processing payments.

1. Define Payment Methods (Transaction: FQP1): Define one or more country/region payment methods for outgoing payments.
2. Define Specifications for Paying Company Code (Transaction: FQP4): Select company code used for automatic payment transactions and assign the payment methods.

To apply the VAT split for processing payments, you must complete the settings as follows. In the following print screen, we take Poland as an example.

1. Define Payment Methods for VAT Split in Contract Accounting: In the transaction SM30 enter the view FKKID_VATSP_PM_V to assign a payment method to the country/region key for VAT split.
2. Enable the VAT Split Option Screen (Transaction BUS6):
   • In the Screen sequences, select the entry BUP001.

   • In the Screen sequences – Screens, enter a screen code and an item number.
     Take Poland sample values as example. In the next setting, you enter events to this item number.

     Item	Screen
     9000005	MKKPL1

     
3. Enter Business Data Toolset Events (Transaction: BUS7)
   • Select for the events based on your business requirements.
   • In the Event -> Function Modules enter the item number and the function module.
     

   • You can refer to the table below to add the item into the events according to your business requirements.

     Event	Item	Function Module	Call	Application
     DCHCK	9000005	FKKPL_BUPA_VATSP_EVENT_DCHCK	X	MKK
     DLVE1	9000005	FKKPL_BUPA_VATSP_EVENT_DLVE1	X	MKK
     DSAVC	9000005	FKKPL_BUPA_VATSP_EVENT_DSAVC	X	MKK
     DSAVE	9000005	FKKPL_BUPA_VATSP_EVENT_DSAVE	X	MKK
     ISDAT	9000005	FKKPL_BUPA_VATSP_EVENT_ISDAT	X	MKK
     ISSTA	9000005	FKKPL_BUPA_VATSP_EVENT_ISSTA	X	MKK
     XCHNG	9000005	FKKPL_BUPA_VATSP_EVENT_XCHNG	X	MKK

4. Business partner master data setting (Transaction: BP)
   • Enter the business partner.
   • In the Display in BP Role, select Contract Partner.
   • In the Country-Specific Data (FI-CA), enter a valid time for the VAT split and select 2-Split Enabled as the VAT Payment Type.

SAP Notes

You can refer to the SAP Notes for VAT Splits for localization in Poland.

1. 2653460: VAT split payment format PL_ELIXIR-O and maintenance for MKK partner
2. 2664940: VAT split payment format PL_ELIXIR-O and maintenance for MKK partner, correction #1

Is this blog post useful to you? Leave your comments to let us know your thoughts!