Why is the COGS Third Party 5030200 standard YCOA account is set up as not relevant for tax?

[Gabor5]

Hello!

During supplier invoice creation (App: Create Supplier Invoice) we get this error message that the account.

I understand the message and I know how to solve it. I just don't know why is this account set up like this by standard? What is the reason/logic behind this? Why is this (and most of the 5* accounts) set up as not relevant for taxes?

Thank you in advance!

[Jeremy_Deo]

Hello again dear user,

And thank you for asking your question in the SAP Community blog.

SAP sets the 5030200 COGS Third Party account and most 5* accounts  as not tax relevant by default because these accounts are used for internal cost reporting, not for transactions where VAT is actually calculated.

Tax is handled when you post an invoice (e.g., a vendor invoice for goods), not when the cost hits the COGS account. COGS is usually updated automatically after goods are delivered, so there's no tax to post again at that point.

Marking these accounts as non-tax relevant helps prevent mistakes, keeps the tax logic clean and compliant, and ensures tax is only posted where it’s legally required like on sales or purchase transactions.

I hope this will help you answer your question.

Best regards,

Jeremy