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Intercompany Journal VAT Posting Issue

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Posted on by CU05060412-0

Intercompany Journal VAT Posting Issue Charging Full Invoice Amount to Company-B Instead of Separating VAT.

The core issue in your scenario is that VAT is not being separated from the expense when posting the invoice from Company A to B.

Company-A were sent an invoice, and this relates to another of our companies Company-B.

Our AP department has posted the invoice in BC and charged it to Company-B.

The invoice is for £250 + £50 vat so £300 in total.

I would expect the £250 to be charged to Company B and the £50 posted to the VAT nominal code, as this is what happens in all our other companies.

However, the whole amount £300 is being charged to Company-B, so the vat as well.

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Dynamics 365 Business Central

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Jainam M. Kothari 12,130 Super User 2025 Season 2 on at

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Intercompany Journal VAT Posting Issue

Hello,

To resolve this, ensure that VAT Business and Product Posting Groups are properly assigned, and use separate lines in the intercompany journal—one for the net amount and another for the VAT.

So VAT is posted to the correct nominal account in Company-A and not passed on to Company-B.

May this can help : https://learn.microsoft.com/en-gb/dynamics365/business-central/intercompany-allocate-costs

https://community.dynamics.com/forums/thread/details/?threadid=f94deecf-132c-439c-b4d2-f7b8f4f2d217

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Andrés Arias 4,164 Super User 2025 Season 2 on at

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Intercompany Journal VAT Posting Issue

Hello,

I would recommend reviewing the VAT settings within the company in order to determine any errors.

The following link might help:
https://learn.microsoft.com/en-gb/dynamics365/business-central/intercompany-allocate-costs

I hope I can help.

Regards,

Andres

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Jeffrey Bulanadi 8,431 on at

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Intercompany Journal VAT Posting Issue

Hi

This usually happens when VAT posting groups aren’t set up properly in the intercompany journal. Business Central doesn’t automatically split VAT unless the journal lines are configured to do so

Here’s what you can try

Use two separate lines in the intercompany journal—one for the net amount (£250) and one for the VAT (£50)

Make sure the VAT Business Posting Group and VAT Product Posting Group are assigned correctly on both lines

Check that the G/L accounts used have the right posting groups to route VAT to the correct nominal code

If the intercompany partner isn’t linked to a customer/vendor record, VAT posting might default to 0% or skip entirely

This guide explains how to allocate costs and handle VAT in intercompany setups Allocate Costs to Intercompany Partners - Business Central

If this helped, feel free to mark it as the suggested or verified answer

Cheers
Jeffrey

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Mansi Soni 8,876 Super User 2025 Season 2 on at

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Intercompany Journal VAT Posting Issue

Hello,

Hope the following resources will give you some hints as well!

https://learn.microsoft.com/en-us/dynamics365/business-central/intercompany-how-setup
https://learn.microsoft.com/en-us/dynamics365/business-central/finance-setup-vat

Regards,
Mansi Soni

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Gerardo Rentería Ga... 23,574 Most Valuable Professional on at

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Intercompany Journal VAT Posting Issue

Hi, good day
I hope this can help you, and give you some hints.

Allocate Costs to Intercompany Partners - Business Central | Microsoft Learn

Best Regards
Gerardo

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YUN ZHU 92,727 Super User 2025 Season 2 on at

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Intercompany Journal VAT Posting Issue

Hi, Hopefully the following discussion will give you some hints as well.

https://forum.mibuso.com/discussion/17855/intercompany-postings

Thanks.

ZHU

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