Once a year, I get a tricky invoice for the PV generation from my power supplier. They reimburse me for the delivery of the photovoltaic electricity into the power grid, and one invoice contains:

• reverse charge (output VAT, 0%)
• supplier services (input VAT, 20%)

If the energy is supplied to the grid by an entrepreneur to an entrepreneur, it is subject to VAT under the reverse charge mechanism. The reverse charge VAT is paid by the customer in this case, and the grid operator / utility company is the customer for the PV feed-in. However, usually they supply energy to our company i.e. they are registered as a vendor in the ERP system. The document is issued by the utility in my name under a self-billing arrangement (“Gutschriftsverfahren“). Consider the following:

• the PV feed-in is a side revenue of my company;
• one solution would be to register the vendor as a customer and perform the netting (see Consolidating customer and vendor balances in Business Central);
• however, the invoice number is issued by the vendor. If the vendor is registered as a customer, the credit note can only be entered in the General journal as a generic GL transaction;
• most of the revenue is VAT exempt under the reverse charge regime, but the supplier also included his services on top. These services (well hidden on the printed invoice) not only reduce the revenue, but there is also a VAT on top;
• as a result, the credit note contains both the 0% output VAT (0% sales reverse charge) and the regular 20% input on services.

The reverse charge must be reported as such on the monthly VAT statement. Unlike D365 FO, the Business Central does not strictly follow the Sales direction of the VAT when making the VAT return. In the VAT statements matrix, add the Purchase VAT into the reverse charge section to record and report the PV turnover: