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youssefloutfi
Participant
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SAP has developed a solution called RITA (Registration for Indirect Taxation Abroad) to enable foreign VAT transactions without setting up a permanent establishment, requiring, e.g., a company code.

In this blog, I want to present you with a use case from practice. Step by step, I will explain how RITA provided a solution for our client. Allow me to start with a few questions about RITA that we encountered during the project. This will give you a good understanding of the context. After that, I'll talk about:

  1. The use case

  2. Migrating and activating RITA

  3. Foreign tax declaration in the Netherlands

  4. Foreign plant set-up

  5. Selling from stock delivered from foreign plant to customer in the Netherlands

  6. Tax posting proposal (5Z8)

  7. VAT declaration in the Netherlands


 

A few RITA-related questions

Which foreign countries can use RITA and is the ‘foreign plant’ feature enabled automatically when RITA is activated?

Countries that are RITA-enabled, can be checked on the following link Countries/Regions Where RITA is Enabled - SAP Help Portal. Also check planned releases for other countries in the SAP Road Map Explorer. If RITA is enabled for a particular country, it does not necessarily mean that a ‘foreign plant’ can be set up. Below a list of what is possible now.

Can RITA be used for One-Stop-Shop (OSS)? 


RITA has a different purpose than OSS. RITA is only available in SAP S/4HANA Cloud. OSS is currently supported in SAP S/4HANA, private cloud, and on-premise solutions. If you decide to work with both RITA and OSS together, please be aware that this will not be supported by SAP team.

How can I use the ‘foreign plant’ feature?

To get access to the ‘foreign plant’ feature you should subscribe to the early adopter care program Influence Opportunity Homepage - Customer Influence (sap.com). Subsequently, you should ask for the activation of scope items 5RP and 5Z8.

Should I request country activation for the RITA country?

In case there is no scope item available to enable foreign VAT tax codes for the RITA country, then you should request country activation.

You can find a list of all the possible combinations in https://blogs.sap.com/2022/03/31/registration-for-indirect-taxation-abroad-with-sap-s-4hana-cloud-22...

1) The use case

Our customer has a web shop and a ‘foreign plant’ in the Netherlands. Due to legal regulation, they must charge Dutch VAT to the B2C customer. RITA + ‘Foreign plant’ made it possible to charge correct VAT.

Overview of the process:

 

2) Migrating and activating RITA 

Before starting using RITA, you should take the following steps:

  • Step 1: Configuration Expert in ‘Activate RITA and Maintain Tax registration. Set 2510 to status 1’ Migration initiated (but not yet started).





  • Step 2: GL accountant ‘schedule tax job’ with template Schedule Migration of RITA:





  • Step 3: Configuration expert checks status in ‘Activate RITA and Maintain Tax registration’ 4 = Migration partially complete (pending customizing).





  • Step 4: Configuration expert adds foreign RITA country FR, DE, IE and NL to 2510.





  • Step 5: Configuration expert enters VAT registration number for the foreign plant.





  • Step 6: Assign correct GL account to the foreign tax code A2 in config activity ‘automatic account determination’.






  • Step 7: After successful testing of RITA, you can request the activation via incident under component FI-GL-GL-F. The status will be then set to status 5 = Active.


 

3) Foreign tax declaration in NL

As our customer has the requirement to have a separate declaration for transactions with Dutch VAT, we did the configuration in ‘Setting Up Your Compliance Reporting’.


 

4) Foreign plant set-up

Add the foreign plant in the setup of the organizational structure. Create a trading partner for the newly created foreign plant. This will be needed when intracompany billing will take place between BE coco and NL plant. See setup instructions of scope item 5Z8 (Tax posting Proposal)

 

5) Selling from stock delivered from foreign plant to customer in the Netherlands

If all the required set-up has been done correctly, it will be possible to sell from the sales organization in Belgium, and charge foreign NL VAT when delivered from the foreign plant in the Netherlands.


 

6) Tax posting proposal (5Z8)

Scope item 5Z8 manages taxes in cross border goods movements related to intracompany stock transfer. On a monthly basis you can run a tax job to have the correct VAT transactions registered.

  • Step 1: Schedule tax jobs: create Proposed Tax postings from Goods movements





Log details:

  • Step 2: Open app ‘Manage Proposed Tax postings’





Double click line to see tax proposal detail


 

7) VAT declaration in the Netherlands

During month end closing the correct VAT transactions will be correctly registered in the NL VAT declaration.

Document header view:


Tax item view:


Conclusion:

We can say that RITA is a nice solution to enable foreign tax registration. With RITA there is no need to create a company code for the foreign tax registration. However, there are some restrictions. Please make sure you read and understand SAP note 2907372.
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