Hello,

recently we have discovered that Baan obviously handles VAT wrong for sales orders. We have used a customer located in the EU (Italy), Sales department is located in switzerland (CH) and warehouse from is in Germany (EU). From our understanding now the system should pickup the vat land from the ship-from country (Germany) and pick up the ICT code for that. The problem is that Baan ignores that rules as long as the sales department is not within the EU. Looking at the standard documentation that is the rule how Baan handles that issue. But in real live (and especially here at Pelikan Switzerland) we have got sales offices located outside the EU but goods are shipped from one EU country to another. Can anyone give me an explanation what we are doing wrong here.

Regards - Kai

Kaibou,

I'd double check with your accountants and perhaps get a second opinion. I think that if you sell from Switzerland to Italy, as far as VAT is concerned, this is not an intra-EU transactions. The fact that the goods are shipped from Germany doesn't necessarily change that. Questions that remain are:

- is it actually legal to ship from Germany and invoice from Switzerland? I have my doubts but I've heard others argue that it is. A lot seems to depend on the details of your legal structure and the paperwork involved in the transactions.

- how are you going to handle intrastat reporting? The goods transfer is definitily between EU countries and as such should appear on your intrastat reports, but I've seen Baan struggle with that in the past (try a warehouse transfer between warehouses in different countries; that should be reported on intrastat for all I know even if no sales/purchase transaction is involved.

Hello AWondergem,

I have just learned from Baan that the sales departm. is in indeed the leading country (issue) and that is of course utterly wrong. For tax purposes it is not important where the invoice comes from but the question where it has been issued and whereto it has been delivered. What happens in real live is that a sales departement in switzerland (in our case) is selling goods which are partly delivered from Switzerland and partly from Germany (and even more countries can be involved). Since the vat code is defined on sales order line it should distinguish between a delivery within EU and from a non-EU country to whereever. If the country of the entity which is linked to the sales department is the key-element then it would mean that the a sales order for each destination will have to be created and our sales staff will have to look very carefully which sales department they will have to use. Also that would lead to wrong results when looking on statistics - but that is just a minor issue.

Concerning intrastat we have no problems with that sort of transaction but I must admit that manual warehouse orders sometimes cause problem (issued value is different than receipt value) - that has been reported to Baan as a case.

Regards - Kai


Kaibou,

I'd double check with your accountants and perhaps get a second opinion. I think that if you sell from Switzerland to Italy, as far as VAT is concerned, this is not an intra-EU transactions. The fact that the goods are shipped from Germany doesn't necessarily change that. Questions that remain are:

Intrastat for that should be no problem even though I admit that we have got big problems with warehouse transactions
- is it actually legal to ship from Germany and invoice from Switzerland? I have my doubts but I've heard others argue that it is. A lot seems to depend on the details of your legal structure and the paperwork involved in the transactions.

- how are you going to handle intrastat reporting? The goods transfer is definitily between EU countries and as such should appear on your intrastat reports, but I've seen Baan struggle with that in the past (try a warehouse transfer between warehouses in different countries; that should be reported on intrastat for all I know even if no sales/purchase transaction is involved.

kaibou,

I don't want to sound flippant, but the fact that you don't like the way it works doesn't make it wrong.
If you want to export goods from Germany to Italy as in your example, and you want to do so at a zero rate VAT because it's within the EU, then the invoice must by law have the country and vat registration number for both the seller and the buyer. The vat registration for your company in Switzerland won't do since they are not within the EU. You'll have to invoice from your German company. There is nothing stopping you from physically producing that invoice in Switzerland on behalf of your company in Germany of course, but Baan (or any other ERP system) hasn't really been designed for things like that. If you want to set up a Baan company in Switzerland that looks as if it is within the EU you can of course, but I'm not sure what the Swiss accountants would make of that.

That's my view anyway. If Baan change the way the system works in this area I'd be slightly concerned.

I'd love to hear the opinion of any accountants on the Baanboard with experience in this matter.

Regards,

Alfons.

Hello Alfons,

I understand that 25 countries are currently within the EU but that did not stop Baan from selling it´s product to countries that aren´t. What should stop Baan to take the vat-id from the issued warehouse rather than from the sales department. Neglecting the fact that the layout of invoices within the EU do have to meet certain requirements (that could be customized) the tax handling ignores that there are other countries outside EU - still. As we are in a single log./multi fin. enviroment it is possible to set up entity to entity relationships mainly meant to produce Intercompany Invoices and/or triangular invoices. If one e.g. sets up a relationship (source: German warehouse; destination: sales dep. in CH) what sort of invoices containing which vat codes could be expected if the sales dep. in CH would sell to a customer in CH ? The transaction from the issueing warehous in Germany directly to the customer in CH should have the German VAT country on an tax code indicating it was a EU export. The sales invoice from the swiss sales office to swiss customer should be country CH and regular vat code. Baan uses country CH for the first transaction which is of course wrong - but the second transaction is fine.

Regards - Kai

Kai,

There have been some changes in Baan V fairly recently in this area, if you're not aware you may want to check these. Here is a snippet from the Baan support web site.

Author E Provoost Creation Date: 02 Mar 2004 Alternate ID:
Solution No: 141937 Last Modified: 08 Mar 2004 Status: Published
Product: tdB50c_bgl0 Sub Product: Session: tdsls4101s000
Package: td Version: B50 Release: c
Solution Type: QR: Error Standard Software

Solution description
VERSION(S):
B50_c, B52_a

SITUATION IDENTIFIED IN:
"Sales-Order Lines" (tdsls4101s000)

SITUATION DESCRIPTION:
A company located outside the European Union (EU) sells items to a customer from his warehouse that is located within an EU-country.
Even though import/export tax codes have been defined in session "Tax Handling" (tcmcs0138s000), the system does not pick up the defined tax codes in a triangular invoicing situation.

SOLUTION DESCRIPTION:
In a triangular invoicing situation for a company located outside the European Union with its warehouse located within an EU-country, the system will now pick up the tax codes defined in session "Tax Handling" (tcmcs0138s000).

Alfons,

in my point of view this solution makes it even worse. Taking the example where a sales department in CH sells to a customer in CH and the goods are directly delivered from a warehouse within the EU (e.g. Germany) than Baan creates an invoice to the customer with German VAT country an export code and the internal invoice between the warehouse and the sales dep. picks up country CH with tax code blank !!!

I guess the invoice to the customer should use tax country CH with regular tax and the intra invoice should use country Germany with tax code indicating export.

Unfortunately this is no option and the problem still exists.

Regards - Kai