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Item sales tax groups with multiple sales tax codes

Posted on by 2

Hi guys,

I am currently looking at the Item sales tax group setup for a company in Microsoft Dynamics 365 for operations. Transactions that are subject to sales tax must be associated with both a sales tax group and an item sales tax group. I was thinking about adding two sales tax codes to one item sales tax group. As you can see from the picture below, I have created an Item sales tax group called 12-G with a reporting type of Item. I have further added 2 sales tax codes: EU12-G that stands for 12 % VAT on European goods and SE12 that stands for 12 % VAT on Swedish goods. The setup is the same for the different Item sales tax groups: so I have attached two sales tax codes to one item sales tax code (Swedish + European) instead of for example creating one item sales tax group called 12-G with a reporting type of item and then only added one sales tax code (SE12) and further created one more item sales tax group called EU12-G with reporting type Item with the sales tax code EU12-G. Hope that you can understand the setup from the pictures below.

I was wondering what consequences/problems that the setup with 2 sales tax codes to 1 Item sales tax group could be compared to setting up item sales tax groups for each sales tax code. Which alternative is more efficient?

Thanks in advance

Br

Tony

2308.Capture.JPGALternative-2.JPG

Alternative-2-_2D00_.JPG

  • Sten Baumgarten Profile Picture
    Sten Baumgarten 8 on at
    RE: Item sales tax groups with multiple sales tax codes

    Hi Tony

    It is important that you have sufficient sales tax codes to represent the different type of transactions you need to report on. I have made a small example to illustrate what I think you need to cower domestic and EU transactions where 12% vat is involved. 

    SE-vat.jpg

    I presume that SE12 is used for either domestic sales or purchase. I split it in the example into SE12 sales and SE12 purchase. I need to split the EU12-G into EU sale items and EU purchase items. 

    I created 6 sales tax codes, 4 sales tax groups and 2 item sales tax groups. 

    On Item sales tax group "Item, 12%" I have selected sales tax code SE12 sales, EU sale items, SE12 purchase and EU purchase items. 

    On sales tax group "EU sales" I have select sales tax code EU sale items and EU sale services

    The reason is that I thereby can select between four different sales tax groups on customers / vendors and select between 2 item sales tax groups on items. 

    Example:

    If I have an EU customer with Sales tax group "EU sales" and want to sell an item with Item sales tax group "Item, 12%" to that customer, the sales tax code that these two groups have in common is "EU sale items". That sales tax code will be used calculating vat and post in the Tax module. 

    Kind regards

    Sten

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Item sales tax groups with multiple sales tax codes

    Hi Tony111,

    This is difficult to answer without having a deep knowledge about the tax requirements in your country.

    You should try to make your setup in a way that all values default from either your customer, vendor or item in a way that no manual adjustment is required.

    Recently, I found an example for an Austrian based setup here: erconsult.eu/.../minimalistic-eu-vat-configuration-dynamics-ax

    Maybe you can get some additional ideas from this blog?!

    Best regards,

    Ludwig

  • Tony111 Profile Picture
    Tony111 2 on at
    RE: Item sales tax groups with multiple sales tax codes

    Thanks for the input. The setup regarding the sales tax are correct according to the Swedish law but I was wondering on which alternative that was best when setting up the item sales tax group. Is it ok to add 2 sales tax codes both the swedish and the european that I have created or should I create a item sales tax for each sales tax code. I just got an invoice from a supplier abroad and must registrate an invoice with correct sales tax group and item sales tax group. I must ensure that I choose the appropriate sales tax group and item sales tax code.  

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Item sales tax groups with multiple sales tax codes

    Hi Tony111,

    I am not familiar with the Swedish tax law and can thus not tell you whether you setup is correct according to Swedish law.

    What you should look out for is the reporting type field that is associated with the item sales tax group. This field defines under which section a transaction is recorded in the EU sales list. The EU sales list differentiates between goods and services. Therefore, I am not sure whether your sales tax Code SE12 Goods & Services fits because you classfied it as item transactions in the reporting type field.

    Best regards,

    Ludwig

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