[BRUKERHISTORIE] Automating VAT rates for each database entry [NSG]

[MadsBDamgaard]

As a system user (of Reference Implementation or actual business system) I wish to have VAT rates for each product or service on a transaction document and the associated database entry calculated automatically. So that I can generate an automated VAT report for a determinate (user-specified) period

The VAT rates for invoices applying to the following countries are: NO - 0, 12%, 15%, or 25% depending on product or service (https://www.altinn.no/en/start-and-run-business/direct-and-indirect-taxes/indirect-taxes/value-added-tax/) FI - 0, 10%, 14%, or 24% depending on product or service (https://www.vero.fi/en/businesses-and-corporations/about-corporate-taxes/vat/rates-of-vat/) DK - 0 or 25% depending on product or service (https://skat.dk/skat.aspx?oid=2234579&ik_navn=transport) SE - 0, 6%, 12% or 25% depending on product or service (https://www.verksamt.se/web/international/running/vat) IS - 0, 7%, 11% or 24% depending on product or service (https://www.island.is/en/finance/taxes/taxes_on_goods_and_services/

If the trading partners specified on any invoice transaction documents are from two different countries, the VAT rate shall be 0% and the VAT code shall be "AE" In this case, the VAT amount due shall be summed up on a different VAT account

Relatert til epos: Informasjonsforvaltning/behov_NSG#2

Lenke til design: Lenke til løsningsarkitektur:

[ekoskent]

• Is it mandatory to include the VAT details per product/invoice row or the total VAT amount? -> WP1

• We must also now the counter party details (country, something else?), VAT category code (there is a code list by UN that needs to be extended)

[Makinvu]

It is mandatory to add VAT rate (or VAT category) in the row information in invoices and receipts. But the amount of VAT on row level cannot be used because of rounding differences. VAT information should be collected from the summary in the end of the invoices or receipts. We have solved this already in TALTIO. VAT registration no is needed in EU trade and outside EU there is no VAT handling, it will be dealed by customs when the goods are imported. VAT category list is part of EU eInvoice standard, I will dig it and send a link or list.

[MadsBDamgaard]

the UN list is found here:

Code Values:

 A     Mixed tax rate
          Code specifying that the rate is based on mixed tax.

 AA    Lower rate
          Tax rate is lower than standard rate.

 AB    Exempt for resale
          A tax category code indicating the item is tax exempt
          when the item is bought for future resale.

 AC    Value Added Tax (VAT) not now due for payment
          A code to indicate that the Value Added Tax (VAT) amount
          which is due on the current invoice is to be paid on
          receipt of a separate VAT payment request.

 AD    Value Added Tax (VAT) due from a previous invoice
          A code to indicate that the Value Added Tax (VAT) amount
          of a previous invoice is to be paid.

 AE    VAT Reverse Charge
          Code specifying that the standard VAT rate is levied
          from the invoicee.

 B     Transferred (VAT)
          VAT not to be paid to the issuer of the invoice but
          directly to relevant tax authority.

 C     Duty paid by supplier
          Duty associated with shipment of goods is paid by the
          supplier; customer receives goods with duty paid.

 E     Exempt from tax
          Code specifying that taxes are not applicable.

 G     Free export item, tax not charged
          Code specifying that the item is free export and taxes
          are not charged.

 H     Higher rate
          Code specifying a higher rate of duty or tax or fee.

 O     Services outside scope of tax
          Code specifying that taxes are not applicable to the
          services.

 S     Standard rate
          Code specifying the standard rate.

 Z     Zero rated goods
          Code specifying that the goods are at a zero rate.

[ekoskent]

The challenge with VAT handling in foreign trade is that the VAT is added only on the buyer side. The buyer must know based on the purchased products or services what has been bought and to which VAT rate category it belongs in that country. If there where mappings available between product categories and VAT rates in each country, this could be automated (EAN code -> get product category -> get VAT rate).

[Makinvu]

Product category doesn’t work, because it depends on how this product is used. We cannot automate everything at least in this early stage. You can use the average rate and it goes most of the times right. That’s why we need correction possibility: )

Sent from my iPhone

On 31 May 2019, at 15.11, ekoskent notifications@github.com wrote:

The challenge with VAT handling in foreign trade is that the VAT is added only on the buyer side. The buyer must know based on the purchased products or services what has been bought and to which VAT rate category it belongs in that country. If there where mappings available between product categories and VAT rates in each country, this could be automated (EAN code -> get product category -> get VAT rate).

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[Makinvu]

Product categories could work, if we had that matrix of all countries and product categories with VAT rates. I don’t think we are far enough to suggest this. This demands some standard for product categories and mandatory field in eInvoice, eOrder and eReceipts.

Sent from my iPhone

On 31 May 2019, at 15.11, ekoskent notifications@github.com wrote:

The challenge with VAT handling in foreign trade is that the VAT is added only on the buyer side. The buyer must know based on the purchased products or services what has been bought and to which VAT rate category it belongs in that country. If there where mappings available between product categories and VAT rates in each country, this could be automated (EAN code -> get product category -> get VAT rate).

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[MadsBDamgaard]

if the reference implementation includes the capability to handle automated VAT, via product codes and categories, the deliverable ("product/VAT matrix in the Nordics) suggested by @Makinvu could be prototyped/piloted by the tax participants at a later stage.

[PasiSinervo]

What is CEN CWA 15577 2006 standard. THose include a proposed list of VAT codes for intracommunity trade: AAC goods, AAE transport, AAI tour operators, AAN triangulation and AAO services. These codes would be better set, even though they are not updated to newest VAT changes.

[PasiSinervo]

For both parties product and service codes could be beneficial. Seller must report to VIES whether seller sold services, goods or triangulation. Buyer also needs this same information and domestic VAT rate. If there is common codes like EAN and they are linked to VAT Rates, process could be automatic with no manual recording. In the short run for SMEs and for PoC, I would suggest that SMEs and PoC companies create rules. When product with certain EAN is sold and bought, company makes a rule: this.product uses this VAT rate. So next time it is there. This would help us to demonstrate benefits from those codes. And this is exactly the idea that huge operators have. They have in their ERP links between product and service codes and VAT rates.

[Makinvu]

Tax category codes in the eInvoice file tell the system how to handle VAT reporting and possible bookkeeping entries concerning both seller and buyer. These rules are common to all companies and all EU countries. How each individual company handle the local VAT rate is minor problem and this can be ruled separately by each company

From: PasiSinervo notifications@github.com Reply-To: Informasjonsforvaltning/behov reply@reply.github.com Date: Tuesday, 4 June 2019 at 8.26 To: Informasjonsforvaltning/behov behov@noreply.github.com Cc: Makinvu vuokkohmakinen@gmail.com, Mention mention@noreply.github.com Subject: Re: [Informasjonsforvaltning/behov] [BRUKERHISTORIE] Automating VAT rates for each database entry [NSG] (#200)

For both parties product and service codes could be beneficial. Seller must report to VIES whether seller sold services, goods or triangulation. Buyer also needs this same information and domestic VAT rate. If there is common codes like EAN and they are linked to VAT Rates, process could be automatic with no manual recording. In the short run for SMEs and for PoC, I would suggest that SMEs and PoC companies create rules. When product with certain EAN is sold and bought, company makes a rule: this.product uses this VAT rate. So next time it is there. This would help us to demonstrate benefits from those codes. And this is exactly the idea that huge operators have. They have in their ERP links between product and service codes and VAT rates.

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[ekoskent]

For serving the POCs, a simple mapping is created for product category codes and VAT rates in each countries. These are only necessary for the products involved with foreign trade. The automatic handlers inside the reference implementation shall read the mapping details and create the VAT entries accordingly considering also the VAT codes.: https://docs.google.com/spreadsheets/d/1GcXUvDa0Ez8ZoMrG7cV6sqQUP445BxMR/edit#gid=662109972 (note the reference implementation does not read directly the linked excel but an xml file created from it with the same information)

[PasiSinervo]

We Map these to show potential advantages and scalability. Also we try to test creating rules for systems. This was also a common accepted goal between tax. This also raised interest in regeringskansliets blockchain seminar in Stockholm 18.9, organized By David Suomalainen Pasi

ke 25. syysk. 2019 klo 18.25 ekoskent notifications@github.com kirjoitti:

For serving the POCs, a simple mapping is created for product category codes and VAT rates in each countries. These are only necessary for the products involved with foreign trade. The automatic handlers inside the reference implementation shall read the mapping details and create the VAT entries accordingly considering also the VAT codes.: https://docs.google.com/spreadsheets/d/1GcXUvDa0Ez8ZoMrG7cV6sqQUP445BxMR/edit#gid=662109972 (note the reference implementation does not read directly the linked excel but an xml file created from it with the same information)

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