Working with VAT Group Registrations

VAT group registration is permitted in the European Union by the EC VAT Directive 2006/112, and under similar provisions in several other countries.

• Comprehensive grouping eases the burden of accounting for VAT for closely related enterprises by ignoring supplies of goods and services between group members for tax purposes, and by using a single member of the group to account for VAT on all supplies to and from companies outside the group.
• In other countries, grouping is limited only to combining VAT payments for the members of the group.

If a VAT group registration is applied to a transaction, the tax type is set to either VAT Group (VG) or Not Liable (NL), depending on your configuration, and the tax amount is set to zero. Determination returns VAT group registration information in the Output XML and stores it in the audit database.

Determination's Tax Calculation Engine evaluates transaction data to determine if a VAT group registration applies to a given transaction. There are three different ways that a VAT group registration may be applied to a transaction.

Matching by VAT Group Registration Number

If a VAT group registration number is passed in with the transaction or applied using a TransEditor at either the line or invoice level, Determination will look for VAT groups in the system for which the transacting company is a member. In order for one of these VAT groups to apply to the transaction, all of the following criteria must be met:

• The transacting company is a member of the VAT group.
• The authority selected for the transaction matches the authority that has been configured for the VAT group.
• The VAT group registration number that is passed in with the transaction or applied using a TransEditor matches the registration number that has been configured for the VAT group.
• The invoice date falls within the date range configured for the VAT group.

When the above criteria are met, VAT group functionality will apply regardless of any role-based registrations, customer name or number, and vendor name or number information that is passed in with the transaction or applied through configuration.

Matching by Role-Based Registration Numbers

If a VAT group registration number is not passed in with the transaction or applied using a TransEditor at either the line or invoice level, but role-based registration numbers are included, the following criteria will be used to determine whether or not VAT group functionality should apply.

For a Seller transaction:

• A VAT group registration is configured for the authority that has been identified as applicable to the transaction.
• The transacting company is configured with a registration number or a seller registration number is passed in with the transaction that is applicable to the authority configured for the VAT group.
• A separate company is configured with a registration number that matches the buyer registration number passed in with the transaction, and this company is member of a VAT registration group along with the transacting company.
• The authority selected for the transaction matches the authority that has been configured for the VAT group.
• The invoice date falls within the date range configured for the VAT group.

For a buyer transaction:

• A VAT group registration is configured for the authority that has been identified as applicable to the transaction.
• The transacting company is configured with a registration number or a buyer registration number is passed in with the transaction that is applicable to the authority configured for the VAT group.
• A separate company is configured with a registration number that matches the seller registration number passed in with the transaction, and this company is member of a VAT registration group along with the transacting company.
• The authority selected for the transaction matches the authority that has been configured for the VAT group.
• The invoice date falls within the date range configured for the VAT group.

If you have more than one VAT group configured that meets all of the criteria above and you do not pass in a VAT registration number, Determination will apply whichever one it first encounters in the database.

Matching by Customer or Vendor Information

If neither a VAT group registration number or role-based registration numbers are passed in with the transaction or applied using a TransEditor at either the invoice or line level, the following criteria will be used to determine whether or not VAT group functionality should apply.

For a transaction where the company role is set to seller, if no VAT registration number and no role-specific registration numbers are passed in or applied through configuration, Determination will look to the supplied customer name and customer number fields. If the customer name passed in with the transaction matches the name of a company that is configured as part of a VAT group, or if the customer number passed in with the transaction matches the external company ID of a company that is configured as part of a VAT group, that VAT group will be applied if the following criteria are also met:

• The transacting company is a member of the VAT group.
• The authority selected for the transaction matches the authority that has been configured for the VAT group.
• The invoice date falls within the date range configured for the VAT group.

For a transaction where the company role is set to buyer, if no VAT registration number and no role-specific registration numbers are passed in or applied through configuration, Determination will look to the supplied vendor name and vendor number fields. If the vendor name passed in with the transaction matches the name of a company that is configured as part of a VAT group, or if the vendor number passed in with the transaction matches the external company ID of a company that is configured as part of a VAT group, that VAT group will be applied if the following criteria are also met:

• The transacting company is a member of the VAT group.
• The authority selected for the transaction matches the authority that has been configured for the VAT group.
• The invoice date falls within the date range configured for the VAT group.

If you have more than one VAT group configured that meets all of the criteria above and you do not pass in a VAT registration number, Determination will apply whichever one it first encounters in the database.

See VAT Group Registrations for information about configuring VAT registration groups and their members.

See VAT Group Registration Authorities for a list of supported authorities and their associated transaction types which support VAT group registrations.

See Validating VAT Registration Numbers for information on using the VAT Information Exchange System (VIES) servlet to validate registration numbers for EU member countries.

See Advanced Authority Configuration for information about disabling VAT group registrations for a specific transaction type in one of the supported authorities.

See Calculation Parameters for information about configuring tax types.