Use Tax (SAP Business One)

In the SAP Business One context in Germany, use tax refers to the sales tax that is levied as purchase tax as part of the reverse charge mechanism (Reverse charge procedure) is owed by the service recipient and is mapped in the system using special tax codes.

E-invoicing in Germany: How to implement the obligation with SAP Business One

In the SAP Business One context in Germany, use tax primarily refers to the purchase tax incurred on intra-Community acquisitions from EU countries or certain other taxable supplies from abroad. Consequently, it is the sales tax that is owed by the recipient of the service instead of the supplying company as part of the reverse charge mechanism. SAP Business One calculates the tax amounts for the advance VAT return exclusively on the basis of the tax codes used, which is why business users define special tax codes with the characteristic acquisition reversal for the use tax. If a document with such a tax code is entered, the system automatically generates two posting records: one input tax as a receivable from the tax office and the acquisition tax on the tax code deposited purchase tax account. This means that VAT and deductible input tax are managed neutrally in the general ledger, while the amounts are correctly recognised in the advance VAT return. In addition, the use of the appropriate tax code is crucial for the recapitulative statement for deliveries and other services to other EU countries. The tax date in the document determines the period for which the document is included in the tax report. Furthermore, the EU indicator in the tax code determines whether a document is relevant for the recapitulative statement and inactive tax codes cannot be used when entering documents.

In the SAP Business One context, the term use tax is often used synonymously with the English use tax, but in Germany it specifically describes purchase tax as part of the reverse charge procedure. In the context described above, use tax always refers to purchase tax from intra-Community acquisitions and certain taxable other services from abroad, as mapped in SAP Business One using special tax codes with purchase reversal and, if applicable, EU codes.