Plant abroad Solution

[sarvottam_darshan]

Executive Summary:

A regular requirement in European Union (EU) is to move inventory to warehouses across boarder. In many cases, this inventory movement might just be for logistical movement of goods for eventual sale or primarily for storage and might not be for any manufacturing value add to the product. These warehouses might have their own independent VAT registration number. Given the INTRASTAT regime in EU, there are requirements to not just record such movements but also report them separately for the warehouse in INTRASTAT and VAT reports submitted to the legal authorities.

This whitepaper discusses proven SAP standard Plant Abroad solution for such cases of cross-border inventory movements in EU and its associated VAT accounting and reporting requirements.

Note: Sound understanding of EU-INTRASTAT requirements, Taxation and SAP MM-FI integration is a pre-requisite to this reading.

 

Business requirement:

The following Scenario explains the key requirements



Scenario:

• Company code in Germany and warehouse in Sweden with cross border inventory movement between them.


• Sweden Warehouse is not a company code and doesn’t do any manufacturing value add to the product but has a separate VAT and INTRASTAT registration number and needs to do its own reporting on VAT and INTRASTAT.


• Goods are transferred from within EU i.e from Germany company code to Sweden warehouse


• As per EU VAT reporting requirements, VAT postings should happen for the goods movement to show credit and debit entries for VAT in the same document so that overall VAT impact is nullified for the scenario under


• Critical to Quality for this Solution (CTQs) to work are as listed below

CTQ	CTQ detail
1	Ability to assign VAT registration from different countries to one company code in EU
2	Correct value-added tax (VAT) registration number prints on sales and purchasing documents
3	Calculates the right VAT
4	Handles stock transfers
5	Conducts VAT and INTRASTAT reporting correctly

 

SAP Standard Solution:

SAP provides Plant Abroad Functionality for EU to address the requirements

 

Reference SAP Notes:

SAP Notes:  Description Oss note 63103 Explains logic regarding tax procedures if you are using plants abroad Oss note 1085758 Customizing for stock transports OSS note 850566 If you activate plants abroad then this will be activated for all company codes within one client. Oss note 850566 deactivate plants abroad for a particular company code

 

 

 

 

 

Impact Consideration: Following impacts would need to be considered while deploying the SAP plant abroad solution for an organization that is already on SAP

 

Impact level	Impact - Considered
Company code	Cross-Client FI impact. Some new fields become activated once you set this function. You enter them in the following activities: 1. In the Define Countries activity in the Global Settings IMG, you have to enter: Country currency for the tax return Exchange rate type (usually "M") Indicators for the tax base and cash discount base   For all company codes that do not require a tax code for 'Plants abroad', you can maintain the parameter "Plant abroad not required" with 'X' (Transaction "OBY6") under "Additional entries"   2. In the Define Tax Codes for Sales and Purchases activity, you have to enter the Reporting country for the tax codes by choosing Properties. 3. You make the remaining settings in the Define VAT Registration Numbers for Plants Abroad activity
Report Level	The activation of plants abroad has also consequences for the VAT report (RFUMSV00 program). Here you need to enter/activate additional parameters which are the following: •Reporting country / tax return country •Country currency instead of local currency

 

Business Benefits:

• Compliance to EU VAT and INTRASTAT reporting

• Clear end to end audit trail for each inventory movement and related accounting

• Standard SAP solution

 

 

 

 

 

 

 

Detailed Mechanism:

Configuration setup:

 

Step	Required Setup	Transaction Code	Comments	Setup required
1	Financial Accounting-->Fin Act Global Settings-->Tax on Sales/Purchases-->Basic Settings-->Plant abroad-->Activate Plants Abroad	SPRO	Tick the box with the question: Plants abroad activated	Needs activation for Company code
2	Financial Accounting-->Fin Act Global Settings-->Tax on Sales/Purchases-->Basic Settings-->Plant abroad-->Enter VAT Register Number for plant abroad	SPRO	Enter per company code a country code which is different than the actual country where the company is established and the VAT registration number.	country in which Plant abroad (Sweden in this case) is present  Details
3	Maintain Tax Codes	FTXP	Need to complete the field "reporting country" in the properties of the new tax code. This means that you can use this tax code for the new VAT registration number/new reporting country.
4	IMG: Sales and Distribution-->Basic Functions-->Taxes-->Plant Abroad-->Maintain and Assign Pricing Procedure	SPRO		RVWIA1
5	IMG: Sales and Distribution-->Basic Functions-->Taxes-->Plant Abroad-->Maintain Billing type and billing type proposal	VOFA		WIA
6	IMG: Sales and Distribution-->Basic Functions-->Taxes-->Plant Abroad-->Maintain Copying control	VTFL		Std Setup
7	IMG: Sales and Distribution-->Basic Functions-->Taxes-->Plant Abroad-->Maintain billing relevance for Item Categories	SPRO		Std Setup
8	IMG: Sales and Distribution-->Basic Functions-->Taxes-->Plant Abroad-->Assign GL account to account key	VKOA		UML need to be maintained
9	IMG: Sales and Distribution-->Basic Functions-->Taxes-->Plant Abroad-->Maintain Declaration Numbers	VI62

Output Pre-View:

 

Sample SAP INTRASTAT output related to Plant Abroad scenario





VAT accounting entry for Plant abroad transactions:



Conclusion:

SAP’s solution for Plant abroad meets the VAT and INTRASTAT reporting requirements for Toll-manufacturing and statutory reporting.

References

http://help.sap.com