VAT Management

VAT Management

Managing VAT in ERPLY Books can be very easy and at the same time very flexible. It depends on the processes that the company has.

You can find VAT rates in “Settings” > “Tax rates”. Every tax rate can have its own accounts and also percent. To read more about the VAT rates, read the user manual.

Different VAT Processes in ERPLY Books

Here is the list of possible operations in ERPLY Books:

  • Ordinary VAT. There should be only one tax rate for ordinary sales and purchases. This is the tax rate that has “Main Tax” type in the tax rates module. By default with new sales and purchase document, ERPLY Books chooses this tax rate by default.
  • Fixed assets VAT. If you are purchasing fixed assets, for the operation you should select fixed assets tax rate. If you use fixed assets purchasing module, then ERPLY Books does it for you. Fixed assets tax rate is the tax rate that’s type is “fixed asset”. It is automatically added into the correct section in the VAT report.
  • Reduced VAT. If you have transactions that can be taxed with reduced tax rates, then you need to have a separate tax rate for this. The type for this tax rate should be “Reduced”. This tax rate is automatically assigned into reduced tax section in the VAT report.
  • Tax Free Calculations – there are many different tax free operations:
    • sales to or purchases from EU (goods and services both):
      • Tax rate types for EU sales and purchases. If you add corresponding type to the tax rate, then in the VAT report ERPLY Books knows how to calculate amounts into total sales and input VAT and also show amounts in corresponding fields.
      • Reduced vs ordinary VAT from EU sales and purchases. You can categorise EU VAT into main and reduced goods and services – this means if you have EU reduced goods tax rate, then it applies to all purchases that have this tax rate, with those amounts being added into reduced sales VAT, and not ordinary sales VAT.
    • Non-EU sales and purchases – separate tax rate with the type of “Export”.
    • Tax free sales and purchases – separate tax rate with the type of “Tax Free”.
    • Non-taxable purchases and sales – separate tax rate with the type of “Other Tax”. All tax rate that have type as “other tax” won’t be included in the VAT report.
  • Customs VAT. If you have customs VAT, then ERPLY Books assumes following process: you pay something at the border that can be claimed back, in fact, 100% of it. If there are other fees that are taxed with ordinary amounts then you can select ordinary VAT rate for that amount. To manage customs amount, you must follow those steps:
    • You need to add new tax rate for customs. The type of the tax rate should be “customs” and the percentage should be zero.
    • It is wise to have separate article for customs. Add this from “Incomes”/”Purchases & expenses” > “Purchase and Sales articles”. The expense account should be in the VAT account and tax rate in the “Customs tax rate”.
    • When adding customs invoice then we want to claim back all the amount that we have paid. Thus, select the article and add the amount. That’s it.
    • If you have selected “customs” for the tax rate, then it is automatically included into input VAT in the VAT report.
  • Sales passenger VAT. The process is as follows:
    • Sales happen as they always do – with ordinary VAT.
    • When customer claims back VAT at the border, then you cannot control this process – thus we claim this amount only if the company that manages those transactions sends us an invoice.
    • For managing sales passenger VAT you must have separate tax rate for this. The type must be “Sales Passenger Tax” and percentage should be zero.
    • It is wise to add a new article for sales passenger VAT claims. Add this from “Incomes”/”Purchases & expenses” > “Purchase and Sales articles”. The expense account should be in the VAT account and tax rate should be sales passenger tax rate.
    • When adding customs invoice then we want to claim back all the amount that we paid. Thus select the article and add the amount. That’s it.
    • If you have selected “Sales Passenger Tax” type for the tax rate then the amount with this tax rate is reduced from ordinary sales and is shown in corresponding tax field.
    • NB: with this process we don’t connect actual sales invoices with the sales passenger VAT.

Managing VAT with ERPLY Integration

This tutorial is meant for back office (POS & Inventory module) users who have EU sales and purchases and other VAT related questions.

The rules hierarchy of syncing documents is as follows:

  • If there is a setting to sync all document rows, then it always takes information from rows and looks into details – whether there are service sales/purchases etc.;
  • If there is no setting to sync document rows, then it takes the summary given by ERPLY API without looking into the details;

The tax rate rules for ERPLY Books and ERPLY back office are quite the same – every invoice row can be connected with one tax rate. And all tax rates are synchronised automatically from back office.

Different cases of use:

  • EU goods and services sales and purchases
    • ERPLY Books can sync automatically sales and purchases into EU goods and services tax rates. For this comes the following steps:
      • You need to have tax rate in ERPLY Books for EU goods (type has to be “EU VAT (goods)”);
      • You need to have tax rate in ERPLY Books for EU services (type has to be “EU VAT (services)”);
      • You DON’T need separate EU rates into back office;
      • In back office you need to have separate 0% tax rate;
      • In ERPLY Books you have to have following settings enabled (settings -> ERPLY POS & Inventory Settings):
        • “Sync non-Stock Items Automatically” – this always synchronises new Non-stock product or service
        • “Sync Sales Invoice Rows for Custom non-Stock Item Revenue Mapping” – this always synchronises all invoice rows
    • If you have followed the latter settings, then ERPLY Books synchronises documents in  following order:
      • Sales Invoice
        • If the invoice is a type of EU invoice AND tax percent is zero, THEN:
          • If item is stock item, then EU Goods tax rate is selected;
          • If item is non-stock item, then EU Services tax rate is selected;
      • Purchase Invoice
        • IF invoice row tax percent is zero AND if supplier is an EU country THEN:
          • If item is stock item then EU Goods tax rate is selected;
          • If item is non-stock item then EU Services tax rate is selected;
        • Or ELSE invoice row tax rate is selected. It is important to note here that when supplier’s country is not defined then ERPLY Books uses the tax rate selected in the invoice. Supplier country is taken from suppliers main country not from the address. And country must be iso 2.
  • VAT from Prepayments
    • ERPLY Books don’t calculate VAT from prepayments by default. If you need to calculate it, you must assign VAT rates for customer groups or customer types (domestic/EU/outside EU).
    • To assign customer tax rates you must go to “dashboard” and search for “customer tax rate group”.
  • Everything else:
    • All other transactions are taken straight from the invoice – if you need to assign exception to invoice in the back office.
    • When synchronising invoices by default, then if new tax rate is in the invoice that doesn’t exist in ERPLY Books – then it will be synchronised. That is the reason why during the first setup, it is wise to synchronize tax rates in order to prevent duplicates.