Declarations > Tax management > Others > Setup > VAT entities 

Ergonomics | Index

Use this function to create and manage VAT entities for a single or multiple companies or a single or multiple sites. VAT entities enable you to define distinct VAT returns at the site level.

This function can only be used as part of the VAT framework.

Head member

One company or site in the entity must be identified as the Head member. Information related to the Head member, such as address and tax number or identifier, is used for extraction and submission. All members in an entity must have the same legislation.

When the country for the Head member has a control script, (e.g., Belgium, Spain, France, Italy, Poland, and Portugal), the related format controls are enforced on the company tax ID number and/or the EU VAT number.

For UK companies: The VAT Registration Number can contain more than 9 digits and have a specific structure. These numbers can be entered in the Additional tax identifier field. They are not controlled, and they are not sent to HMRC. The EU VAT number is submitted to HMRC from the VAT returns function.

Member companies

• Only legal companies or financial sites can be part of a VAT entity.
• The main legal ledger for all entity members must be in the same currency.
• A VAT entity can have a single company. When required for declarations, a single company must be made part of a VAT entity for VAT declarations.
• One member of the entity must be designated as the Head member that represents the group as a single entity for tax purposes. The Head member company details, like address and tax number, are used for the VAT declaration.
• By default, an entity is active upon creation and available for VAT declarations.
• You can set an entity to Inactive without deleting the entity.
• If a company leaves the VAT entity, you need to set the entity to Inactive to preserve the entity structure history. You can then create a new entity and set that to Active.
• You cannot delete or modify a VAT entity if a VAT form exists.

VAT posting option

If you select To be posted in the VAT posting block, you can use the VAT - VAT return automatic journal to generate journal entries for VAT returns that offset the total VAT amount calculated for each company into Tax to disburse or Tax credit accounts. This creates a VAT line with the amount for each invoice.

For the Head member, the total amounts for the tax accounts are posted.

For member companies, an intercompany line is generated that initiates the transfer to the net VAT.

After the VAT return is extracted in actual mode and validated in the VAT returns function, you can use the Post action to generate the journal entries.

If a VAT entity includes several companies, you need to define the intercompany accounts used for journal entries between each company. This is done in the Intercompany account mapping function.

If a VAT entity includes several sites, you need define the inter-site account used in the journal entry with multiple sites at the line level in the Chart of accounts function.