Standard reverse charge VAT

The reverse charge VAT mechanism can automate tax management for intracommunity transactions. For purchases, tax is calculated and posted at the same time in a deductible tax account (debit) and in a collected tax account (credit).

	Debit	Credit
Account payable		1000	Example of a domestic purchase 1000 GBP and 20% basic VAT rate for domestic
Purchase	1000
VAT deductible	20
VAT collected		20

The reverse charge VAT mechanism has been extended to non-transborder transactions as a tool to prevent tax fraud:

• Reverse charge VAT is triggered depending on the BP characteristics.

• If triggered, reverse charge VAT applies at the header level.

BP tax rule (GESTVB)

Open: Common data > Common tables > Taxes > BP tax rule

Create a BP tax rule with an EU rule type if you need to trigger the reverse charge VAT when using a supplier with this BP tax rule in purchase documents or AP invoices.