General parameters > Chapter Common Data > Parameter DEPMGTMOD (Discount management mode) 

Index

Use this parameter to specify the calculation and generation method for discounts applied in case of early payment, and to specify the bank charges applied in case of late payment.

Rebate on VAT

This management mode is the one of states who authorize the calculation and posting of a VAT payable only for the discount amount of the invoice (even when the invoice is paid in due time with no discount). This method was used in Great Britain until the end of March 2015.

Principles:

The discount corresponds to a reduction of the ex-tax amount and of the amount of the main tax (VAT).
The main tax discount is taken into account in the invoice, whereas the ex-tax discount is only applied during the payment.
When an invoice includes a Discount code, this code systematically applies to the VAT as soon as the invoice is generated. It does not apply to the secondary taxes (additional and special taxes).

When an invoice is entered, the calculation process uses a discount code and the associated invoicing element (the Rebate on VAT flag must be enabled on the element). This invoicing element only affects the VAT share. The discount rate applied to the invoicing element is the negative rate (discount rate) which has the highest absolute value.

At Sales and Purchase invoices level, the calculation of the discount on tax is carried out in the tax grid and in the invoice element grid where it reduces the base subject to all the main taxes.

At sales invoice level, the invoicing element associated to the discount code does not appear in the invoicing element grid or in the invoice valuation grid. However, it is taken into account during the calculation of the invoice where it reduces the subject basis of tax codes (VAT).

During the payment, depending on the execution date, a discount line can be generated: it is used to modify the ex-tax amount without modifying the VAT (which has already been taken into account).

When the Rebate on VAT mode is at use:

• The scope of the discount amount calculation in payment entry/suggestion always includes the VAT, whereas the calculation of the discountable base applies to the VAT-excluded amount: the rebate on VAT has already been deducted when creating the invoice.
• When the two following conditions are met, all the purchase and sales invoicing elements are considered as subject to the rebate on VAT, even though the Subject to discount flag is not enabled in the invoicing element setup.
  

Breakdown by VAT (invoice level)

This management mode is traditionally used by companies subject to legislations requesting a VAT declaration (France, Spain, etc.).

Principles:

The discount scope of application is set up at invoice level based on:

• The Discounts/charges code (ex-tax or incl-tax scope)
• The Sales Invoicing elements and Purchase Invoicing elements (Subject to discount flag) or invoice lines of BP accounting (Subject to discount status), in the Customer BP invoices and Supplier BP invoices functions.
  

For payments, the calculated discount is generated with respect to the breakdown by VAT of the original invoice.

Example:

Sales of industrial equipment subject to a 20% VAT, accompanied by documentation subject to a 7% VAT.

If a 10% discount code applies to this invoice, in case of an early payment, the discount amount will be 1,307.00.
During the payment, two discount lines are generated:

• A line of 1,200.00 for the 20% VAT rate, leading to an ex-tax line of 1,000.00 and a VAT remedial amount of 200.00 in accounting.
• A line of 107.00 for the 7% VAT rate, leading to an ex-tax line of 100.00 and a VAT remedial amount of 7.00 in accounting.
  
  

Global calculation

This management mode corresponds to the one companies which do not deal with the VAT tax traditionally use (USA).

Principles:

The discount’s scope of application is defined in the same way as the Breakdown by VAT - invoice level mode.

In payments, the generation of the calculated discount is global and does not take the original invoice structure into account.

Example:

In the previous invoice example, only one discount line is generated for an amount of 1,307.00, during the payment.
In this context, the discount account associated with the accounting destination should be set up with a "Not subject" type of VAT management, or if not, the accounting destination should be set with no VAT management at all.

Distribution by VAT (invoice level)

This management mode corresponds to the one German or Austrian legislation companies traditionally use.

Principles:

The discount scope of application is defined in the chart of accounts (Subject to discount status in the Accounts table). This scope will thus depend on the accounting entry linked to the paid open item.

For payments, the calculated discount is generated with respect to the breakdown by VAT of the original invoice.

Example:

See above the example provided in the Breakdown by VAT (invoice level).

When the Breakdown by VAT (account level) mode is on:

• The discountable base amount is never displayed in sales, purchase, and BP accounting invoices.
• When the two following conditions are met, all the purchase and sales invoicing elements are considered as subject to discount, even if the Subject to discount flag is disabled in the invoicing element setup.
  

Discount on VAT (exempt) / Global

This management mode corresponds to the one Belgian legislation companies traditionally use.

If the discount code of the invoice is linked to an invoicing element, the management mode is Discount on VAT (exempt).
If the discount code of the invoice is not linked to any invoicing element, the management mode is Global.

1/ The Discount on VAT (exempt) mode

This mode applies when the discount code specified on the invoice is linked to an invoicing element.

Principles:

The discount calculation is almost the same as for the Rebate on VAT mode.
The discount corresponds to a reduction of the ex-tax amount and of the amount of the main tax (VAT).
The main tax discount is taken into account in the invoice, whereas the ex-tax discount is only applied during the payment.
When an invoice includes a Discount code, this code systematically applies to the VAT as soon as the invoice is generated. It does not apply to the secondary taxes (additional and special taxes).

At Sales and Purchase invoices level, the calculation of the discount on tax is carried out in the tax grid and in the invoice element grid where it reduces the base subject to all the main taxes.

At sales invoice level, the invoicing element associated to the discount code does not appear in the invoicing element grid or in the invoice valuation grid. However, it is taken into account during the calculation of the invoice where it reduces the subject basis of tax codes (VAT).

At BP invoice level, the invoicing elements are recorded on the invoice lines. For every invoice line, the discount on VAT is only applied when the Discount check box is selected.

When the Discount on VAT (exempt) mode is at use:

• The scope of the discount amount calculation in payment entry/suggestion always includes the VAT, whereas the calculation of the discountable base applies to the VAT-excluded amount: the rebate on VAT has already been deducted when creating the invoice.
• Regardless of the invoicing element linked to the discount code, other invoicing elements can be entered in the purchase or sales invoices.
  Elements of the Decrease type are always taken into account.
  Elements of the Increase type are only taken into account if the Subject to discount flag is enabled in the invoicing elements setup.

When an invoice is entered, the calculation process uses a discount code with a tax-including calculation scope and the associated invoicing element (which must be set up with the Rebate on VAT flag enabled). This invoicing element only affects the VAT share. The discount rate applied to the invoicing element is the negative rate (discount rate) which has the highest absolute value.

Invoice posting:

When posting an invoice, the related discount is saved on the standard expense or income account on an separate entry line since the discount amount must be linked to an VAT-exempt code. This exempt tax code is defined by the DEPEXETAX - Discount tax code parameter (TC chapter, INV group).

Example in customer BP accounting:

Customer BP invoice with two invoice lines and a discount rate of 2%.
Line 1: Account 701001, Ex-tax amount: 1,000, Discount check box selected, VAT: 21%
Line 2: Account 701001, Ex-tax amount: 1,000, Discount check box cleared, VAT: 21%

The discount basis from which the VAT is calculated is equal to:
- Line 1: 1.000 * 1 = 980
- Line 2: 1,000.

The generated account entry is the following:

(1) 1,980.00 = 980.00 for line 1 + 1,000.00 for line 2
(2) 20 = 1,000.00 * 2% (2% discount on line 1)
(3) 415.80 = 980.00 * 21% (line 1) + 1,000.00 * 21% (line 2)

2/ Global Mode

This mode applies when no discount code is specified on the invoice or when it is but the invoice is not linked to any invoicing element.

Principles:

This management mode is similar to the Global calculation mode.
The discountable basis is calculated and displayed on invoice entry. The discountable basis is calculated:

• based on the ex-tax or tax-incl. amount depending on the calculation scope (ex-tax or tax-incl.) defined on the discount code linked to the invoice,
• based on the invoicing elements defined as subject to discount on sales/purchase invoices; For BP invoices, the Discount check box will be selected or cleared on the lines corresponding to invoicing elements.
  

Contrary to the Discount on VAT (exempt) mode, the Global mode has no impact on the VAT amount calculation or on the invoice posting.

Specificities of invoicing elements with the tax-including value as calculation basis for purchase and sales invoices: regardless of the discount calculation scope (ex-tax or tax incl.), the tax-including amount of the invoicing element is always considered. The ex-tax basis cannot be determined for this type of element.

In payments, the generation of the calculated discount is global and does not take the original invoice structure into account. The discount line that can then be generated applies to the tax code of the discount account (if subject to VAT).