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With holding tax in Italy localization

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Posted on by Gianardi

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If I post a vendor invoice for a vendor with with holding tax, and I use payment method which close directly the invoice, BC365 doesn't calculate the amount related to the WHT.

Example:

If a post an invoice for 1000 EUR and WHT is 20% when I pay the invoice, BC365 should calculate:

- 800 for Bannk

- 200 for WHT debit

These split works fine if I use manual payment or eletronic payment but it doesn't work if a use a payment method that closes automatically the invoice.

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Davide,

Happy New Year. I did a withholding tax setup for one of my customers. Note that this was for a GB (Great Britain) version. The VAT setup accounted for VAT and its effect on including or excluding from the amount paid to the Vendor. Withholding Tax was different in that they wanted to withhold the amount paid and pay a taxing authority the funds. Here is how I set this up:

1. The Vendor Invoice was 1000 EUR but I will withhold 20% for Tax (Withholding Tax) so the NET Due the Vendor is 800 EUR.

2. Create a Purchase Invoice and enter the first Purchase Line for QTY 1, Direct Unit Cost 1000

3. In the 2nd Purchase Line I entered G/l Account = Withholding Tax Acct., Qty = -1, Direct Unit Cost (-1000*.20) or -200 EUR

The net of the 2 lines = 800 EUR payable Vendor. Now this Vendor has a Payment Method that when I post the Purchase Invoice it will auto-apply the Direct payment to my Bank Account (auto-Debit).

Note: This was the process the customer wanted and could have been automated more but they wanted the control on the Withholding Tax application.

I hope this helps you.

Thanks,

Steve

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Gianardi 112 on at

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Dear Steve,

happy new year to you, too.

Sorry but in Italy WHT works in a different way compared to UK.

In Italy when you post a vendor invoice for 1K, in your accounting system you have these movments:

Cost for 1000 @ Vendor for 1000

In this moment no additional entry is done by BC365, but it save the amount related to the WHT in another table.

After, when you pay manually the invoice BC365 makes these movments:

Vendor for 1000 @

@ Banck for 800

@ Social security debt for WHT for 200

These third line is inserted automatically by BC365 during the manual payments but is doesn't wotk when you use a payment method with a balance accoint whic close automatically the invoice during the posting.

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Davide,

Thank you for the information on the Italy Localized functionality. With that said, the Payment Method, when you make the payment manually, seems to be the issue based on your first notice. However, since I do not have an Italy Localized version I cannot test my theory. I want to add one more piece of helpful information, in case this goes back to setup... Below is the link to Microsoft Italy - Setup Withholding Tax documentation. Maybe double-check this and test again.

docs.microsoft.com/.../hh937841(v=nav.90)

Thanks,

Steve

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