Sometimes you pay Reverse Charge in D365
Under the “reverse charge system” it is the company receiving the service that is liable to pay the VAT, and not the company providing the service. Normally, the net amount of VAT to pay is offset by the same amount of the receivable VAT, and the tax burden remains 0. But not always: sometimes the tax office wins. These are 2 cases I’ve got this year:
- A service was provided by an EU entrepreneur who had no EU VAT number. The invoice was VAT excluded, but I had to calculate the VAT payable (reporting code 1157 „Steuerschuldübergang bei Bezug gemäß § 19 Abs. 1 zweiter Satz, § 19 Abs. 1c“ in Austria, code 47 „Steuer, im Inland steuerpflichtige sonstige Leistung eines EU Unternehmers § 13b Abs. 1 UStG“ in Germany), while the VAT receivable was nil (otherwise reported as 1166 „Vorsteuer: Steuerschuldübergang gemäß §19, grenzüberschreitende Leistungen“ in Austria or code 67 „Vorsteuer aus Umsätzen nach §13b Abs. 2 Nr. 11“ in Germany).
- There are more and more citizens who sell excess solar power to the grid, thanks to the overall trend, public incentives and the war. This falls under an obscure, but less and less exotic Reverse Charge regime for producers/resellers of electricity (reporting code 1132 “Steuerschuldübergang bei Bezug gemäß § 19 Abs. 1d: Gas und Elektrizität“ in Austria). If they resell, they have a deductible VAT to offset. But if they produce, they have to pay on top of the Credit note granted to them by an energy company or the authority.
Solution in Dynamics 365 for Finance
Blog series on VAT in the EU