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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / Currency Significance ...
Finance | Project Operations, Human Resources, ...
Answered

Currency Significance in Sales tax code

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Posted on by Ramit Paul 22,797 Most Valuable Professional

Hello Experts,

I want to have your opinion on this issue.

I am currently working on a VAT SETUP for UK, however there are some addition but all are OOB confg.

Customer will use two sets of VAT scenario because they will use this LE for UK and NL both, means they will report to both TAX AUTH UK and NL both.

1:They will use one sets of TAX codes for UK and we have the Tax code currency as GBP

2: They will use tax codes for NL with EUR currency so we have set Tax code currency as EUR.

However, I want to know what is the impact of tax code currency in accounting? because anyway the above two bookings will be done by Vendor/customer level currency.

So, example, for UK the vendor will have GBP currency, so if I set the tax code with EUR currency (just a thought as curious), what will be the impact on this case?

 

I have the same question (0)
  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at

    Hello Ramit,

    My knowledge is that D365FO does currently not support incorporating and reporting VAT for more than a single country (UK and NL) out of a single D365FO legal entity.

    Can you please double check with MS that this is still the case?

    Best regards,

    Ludwig

  • Suggested answer
    Ramit Paul Profile Picture
    Ramit Paul 22,797 Most Valuable Professional on at

    Hello Dr. Ludwig,

    We are creating two VAT scenario by creating two sakes tax authority and two separate sales tax settlement period, and it is pure configuration.

    However for localization they will use UK localization only.

    For NL they will report VAT manually.

    If you could assist with my question

  • Verified answer
    Gaurangkumar Jani Profile Picture
    Gaurangkumar Jani 4,534 User Group Leader on at

    Hi Ramit,

    I have done the same for Germany & UK taxation in a single German Legal Entity.

    Your approach is right, it will not affect anything as your VAT report will be done based in TAX Settlement Period which will be linked to different TAX authority. And each authority will be linked to the different TAX Report layout, which will help you to generate a country-wise TAX Report. Example:  for the UK- use English Report Layout and for NL use Default.

    In terms of Accounting, all transactions of TAX related to NL will be posted in EURO which will be converted in GBP using the accounting exchange rate, so that won't be an issue.

    Regards,

    Gaurangkumar Jani

  • Suggested answer
    Ramit Paul Profile Picture
    Ramit Paul 22,797 Most Valuable Professional on at

    Very good, Thanks Gauranga,

    One question, like my question, what is the significance of mentioning Currency in VAT code?

    If I even select EUR in vendor.invoice level and the VAT code is in GBP, will that affect in accounting?

    I tested but no impact, system converts from invoice level, so mentioning currency in VAT code doesnt make sense, what do you think?

  • Gaurangkumar Jani Profile Picture
    Gaurangkumar Jani 4,534 User Group Leader on at

    Hi Ramit,

    There won't be an issue in Accounting, but the system will check TAX Code currency & Vendor (linked to TAX Authority) currency and give you a warning if it won't match.

    Warning:

    pastedimage1600841227295v1.png

    As your TAX Authority in both countries will be different and it will have a specific currency code. 

    There is no other impact as per my knowledge.

    Regards,

    Gaurangkumar Jani

  • Verified answer
    André Arnaud de Calavon Profile Picture
    André Arnaud de Cal... 301,075 Super User 2025 Season 2 on at

    Hi Ramit,

    The currency on the VAT code is to determine which currency to use for the VAT reporting. It is commonly used when the accounting currency is different from the VAT reporting currency. For the Dutch VAT reporting, it needs to be done in EUR.

    We have several companies in the Netherlands who are using USD as accounting currency, but still the VAT reporting should be done in EUR. There is no impact or difference on posting invoices, but only there can be some rounding differences at the moment of posting the VAT reporting settlement.

  • Ramit Paul Profile Picture
    Ramit Paul 22,797 Most Valuable Professional on at

    Great, thanks Andre. understood

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