Plant abroad in SAP within European Union and outside EU

FollowingRSS feedLiked
7 Likes 12,924 Views 3 Comments

SAP has provided the functionality of plant abroad where the plants can be created outside the company
code. Please refer to the example below, the legal entity or the company code in created in Belgium and
the plant under it are created in France and Switzerland.

There are many reasons why an organization decide to go ahead plant abroad. One of the classic example
is when an organization have branches outside the company code country, so instead of creating company
code in every country the organization may decide just to go ahead with plants.

Moreover, the organization may be selling to consumers (B2C) in other EU countries. If they sell goods
and send to consumers in another EU country, they need to register there and charge VAT at the rate
applicable in that country.

However, if they were selling to business (B2B), they do not charge VAT – if the customer has a valid
VAT number. The customer in this case has to account for the VAT on the transaction as if it had sold the
goods himself, at the applicable rate in customer country. Normally, he will later be able to deduct this
amount. Therefore, plant broad is relevant to B2C sales and it’s not required for B2B sales in other EU
country.

Plant abroad design.

Customer invoice
We’ll use the above example to understand how the plant abroad works. Let’s assume that an organization
in Belgium is selling to a customer in France. The customer is consumer without a VAT registration
number. Therefore, the Belgium organization have to be registered in France and it should charge VAT at
the French rate. In the physical invoice printout to the customer, the French VAT number should be
printed.

The customer sales order for the French customer. This customer sales order in created in Belgium
company code( 1200) with the French plant( 1202). The tax departure country is modified to “FR-France”
in the sales order. Using MWST pricing conditions, the output tax code pulled is with French tax rate.
Although this tax code is created in Belgium company code, the reporting country is France (activating
plant abroad allow reporting country in tax code FTXP settings).

Tax departure country helps to populate the correct VAT number in the customer invoice. The standard
print program uses this field to get the departure country VAT instead of company code VAT registration
number. Furthermore, you maintain the various VAT number in the customizing setting as below.

SPRO Configuration

Tax codes at the rate applicable for France may be selected using the departure country and destination
country combination as below.

The tax code is created in Belgium but the reporting country is France. This field is activate along with
activation of plant abroad.
Reporting country is used for filing tax returns or getting tax report for France. Reports like
“S_ALR_87012357 – Advance Return for Tax on Sales/Pur” have the “tax return field” which can be used
for VAT tax reporting in France.

Plant abroad invoice within EU

Another intra-company invoice is required too for VAT and intra-stat reporting called plant abroad
invoice. This invoice is created from the outbound (replenishment) delivery from sending plant to
receiving plant. Although both plants belongs to the same company or same legal entity, therefore there
shouldn’t be any invoices between them. This invoice is fictitious in nature and just used for VAT and
intra-stat reporting and doesn’t have much meaning in terms of FI entry.

SAP have provided a billing type “ WIA” with the pricing procedure RVWIA1which should be used here.

Now, let understand the pricing procedure for these invoices. It has three tax conditions -WIA3, WIA2 &
WIA1. It you refer to the screen print or spreadsheet below, WIA2 is for the departure country (Belgium)
which is normally at 0% vat code. It’s used for reporting in departure country indicating that this was sold
outside Belgium but within EU therefore, 0 % output VAT was applied.
Furthermore, for the destination country( France), there are two tax conditions WIA3 for output and WIA1
for input. Normally the tax percentages are same so that they negate each other. This mechanisms called
VAT reverse charging.

Belgium to France Country Tax

code

VPRS Cost 78.46 EUR 1 PCE 78.46 EUR

WIA3 Ouput Tax France 19 % WF 14.91 EUR

dest. ctry

WIA2 Output Tax Belgium 0 % UF 0 EUR

dep. ctry

R100 F.o.d. -100 % 78.46- EUR

discount
100%

WIA1 Input Tax France -19 % BF 14.91- EUR

dest. ctry

GRWR Statistical 100 % 78.46 EUR

value

Plant abroad invoice outside EU (for example – Switzerland)

Plant abroad solution was designed by SAP for outside plants within EU, but it can tweaked to work for
plants outside EU too. It’s may be essentially the same as within EU with one exception that VAT reverse
charging is not applicable for plants outside EU. The destination country will have to apply input tax
(WIA1) which they can get credit of. Therefore, if you compare with above EU pricing procedure, WIA3
is missing. The output tax in departure country is the same.

Belgium to Country Amount

Switzerland

VPRS Cost 13,563.81 EUR 1 PCE 13,563.81 EUR

WIA2 Output Belgium 0 % UF 0 EUR

Tax dep.
ctry

R100 F.o.d. -100 % 13,563.81- EUR

discount
100%

WIA1 Input Tax Switzerland 0 % BC 0 EUR

dest. ctry

GRWR Statistical 100 % 13,563.81 EUR

value

Intra-stat reporting.
Intra-stat is the report for collecting information of good movement between EU countries. Every VAT
registered organization is required to declare value of arrivals and dispatches within EU if exceed threshold
limit. Please refer to threshold limit here http://www.vatlive.com/eu-vat-rules/eu-vat-returns/intrastat-
reporting-thresholds/.
Now we’ll go through the above example of Belgium to France to review this report both for dispatches
and arrivals.

As Belgium is sending good to France, Tcode “VE02” will give us information of dispatches. Here the
country of destination is France and country for declaration is Belgium.

And it provides information of value of good dispatched, weight, VAT registration # of receiving plant.
Similarly, in the France, intra-stat reporting is required for arrivals. The TCode for it is “MEIS”, the
reporting country is France, and it provides information of dispatching country and VAT # of dispatching
organization apart from value , weight etc.