In this article, we are going to deal with delivery thresholds. Contrary to popular opinion, this is not something that is only of interest to those involved in eCommerce. All enterprises with customers without value added tax liability or customers with tax-exempt revenue are the subject of focus here. In other words, it makes no difference whether you supply to private customers, small entrepreneurs in the sales tax sense, or housing enterprises, etc.. VAT law can trip you up no matter what you do.
So first let’s take a quick look at the theory of VAT in the EU.
As a universal tax on consumption, sales tax should preferably be levied in the country in which the recipient of the goods is located. This is commonly referred to as the destination country principle. In the case of cross-border deliveries – and we need to be careful here – made to entrepreneurs subject to VAT – this is generally achieved by exempting the delivery from VAT in the supplier’s country and by taxing the receiving entrepreneur on an intra-Community acquisition in the recipient country. Thus, the destination country principle can usually be implemented without the supplier having to register for tax in the receiving trader’s country. This is exactly what the so-called mail order regulation (Section 3 © of the German VAT Act (Umsatzsteuergesetz – UStG)) regulates – even if this regulation admittedly does not only apply to mail order businesses. Here, the country of destination principle takes precedence over the country of origin principle for sales between companies from EU member states.
But what if there are recipients of goods who do not have to pay acquisition tax?
These are buyers without a VAT identification number of the relevant member state – i.e. private individuals or certain entrepreneurs, such as small entrepreneurs or housing companies.
Then, in line with the destination country principle, the turnover in the Member State in which the transport ends becomes subject to VAT.
First and foremost, this means extra work for the consignor.
- Invoicing with the respective sales tax of the relevant Member State
- Registration in the member state concerned with the competent tax authority with its own tax number for this member state with its own tax return and tax declaration
- Assignment of a tax advisor/tax representative on site
Ignorance does not protect against punishment in this case either, because if the aforementioned tax obligations are “overlooked” in the country of destination, we quickly find ourselves in the sphere of an understatement of tax in the sense of Section 370 Para. 4 Sentence 1 of the Fiscal Code of Germany. And no – it does not matter in the slightest whether the domestic supplier has (accidentally) declared and paid sales tax in Germany. He has simply understated taxes in the country of destination.
Sounds harsh?
Fortunately, there is some relief in Section 3c Para. 3 of the German VAT Act (UStG)- in the form of the so-called delivery threshold. All this is not applicable if “in the case of the supplier, the total amount of charges attributable to deliveries to a Member State does not exceed the relevant delivery threshold in the current calendar year and has not exceeded it in the previous calendar year”. And as a side note – for vehicles and excise goods (tobacco, alcoholic beverages, mineral oils), the country of destination principle always applies, so that these goods do not play a role in the level of the delivery threshold.
The delivery threshold is ultimately the sum of the charges (value of the goods less the amount of tax) and this is as follows for EU member states (see 3c.1 Para. 3 of the Value Added Tax Application Decree):
- Belgium: €35,000
- Bulgaria: BGN70,000
- Denmark: DKK280,000
- Estonia: €35,000
- Finland: €35,000
- France: €35,000
- Greece: €35,000
- Ireland: €35,000
- Italy: €35,000
- Croatia: HRK270,000
- Latvia: €35,000
- Lithuania: €35,000
- Luxembourg: €100,000
- Malta: €35,000
- Netherlands: €100,000
- Austria: €35,000
- Poland: PLN 160,000
- Portugal: €35,000
- Romania: RON118,000
- Sweden: SEK320,000
- Slovakia: €35,000
- Slovenia: €35,000
- Spain: €35,000
- Czech Republic: CZK1,140,000
- Hungary: €35,000
- United Kingdom: GBP70,000
- Cyprus: €35,000
How do I determine whether this delivery threshold has been exceeded in SAP?
Before we go into the details, we must first consider where we can get the relevant data from. If we take a look at the sales tables we mentioned in this article, the VBRK table for the header data of invoices is the first to catch your attention. In order to be able to filter additionally to the countries of the European Union, we also need the T005 table with the indicator XEGLD (Member of the European Union). To obtain the value in local currency, the BSEG table is also required. In summary, we need the following:
- BSEG: WRBTR (Amount in document currency)
- VBRK: VBELN (Billing document)
- VBRK: BELNR (Accounting document number)
- VBRK: VBUND (Company ID of trading partner)
- VBRK: STCEG (VAT registration number)
- VBRK: LANDTX (Tax departure country)
- VBRK: LAND1 (Country supplied)
- T005: XEGLD indicator: Member of the European Union?
- T005: WAERS (National currency)
Once we have identified the necessary tables and fields, we can divide the analysis into two questions:
- For which countries was the delivery threshold exceeded?
- Which documents led to the excess?
So let’s get started.
Creating an Overview of Delivery Thresholds in SAP
Now for the first question:
For which countries was the delivery threshold exceeded on the basis of the following criteria:
- EU member state without VAT ID
- Outside an existing group of companies
The following SQL statement provides a good overview. First, it lists all deliveries, along with their total amounts:
- for which a billing document was created (VBELN != ”),
- were achieved outside the group of companies (VBUND =”),
- for which no tax on sales/purchase ID was used (STCEG = ”),
- where the country of origin and country of destination are different (VBRK.LAND1 != VBRK.LANDTX) and
- are in the EU (XEGLD != ”)
- along with the total amount of the net values per country (SUM(VBRK.NETWR)).
The starting point is the BSEG table for the amount in the respective foreign currency:
SELECT BSEG.MANDT, BSEG.BUKRS, BSEG.GJAHR, VBRK.LANDTX, VBRK.LAND1, SUM(BSEG.WRBTR), BKPF.WAERS
FROM BSEG
JOIN BKPF ON (BSEG.MANDT = BKPF.MANDT AND BSEG.BUKRS = BKPF.BUKRS AND BSEG.BELNR = BKPF.BELNR AND BSEG.GJAHR = BKPF.GJAHR)
JOIN VBRK ON (VBRK.MANDT=BSEG.MANDT AND VBRK.VBELN=BSEG.VBELN)
LEFT JOIN T005 ON (VBRK.LAND1 = T005.LAND1)
WHERE VBRK.STCEG = '' and VBRK.VBUND = '' AND VBRK.VBELN != '' AND VBRK.LAND1 != VBRK.LANDTX AND T005.XEGLD != ''
GROUP BY BSEG.MANDT, BSEG.BUKRS, BSEG.GJAHR, VBRK.LAND1, VBRK.LANDTX, BKPF.WAERS
The results are visible right away, providing you with an overview similar to the following, for example:
| MANDT | BUKRS | GJAHR | LANDTX | LAND1 | SUM(WRBTR) | WAERS |
|---|---|---|---|---|---|---|
| 800 | 1000 | 2014 | DE | GB | 6,000.00 | EUR |
| 800 | 1000 | 2007 | DE | AT | 9,282,000.00 | EUR |
| 800 | 1000 | 2005 | US | DE | 1,190.00 | USD |
In the test system of the well-known IDIS GmbH, deliveries to Austria are particularly noticeable with almost 9 million euros. Let’s take a closer look at the cases.
Analysis of exceeding a delivery threshold in SAP
Now for the second question:
What evidence led to the delivery threshold for Austria being exceeded in the 2007 financial year?
On the basis of the first statement, this question can quickly be answered, as we only have to make a few small changes:
SELECT BSEG.MANDT, BSEG.BUKRS, BSEG.GJAHR, VBRK.LANDTX, VBRK.LAND1, BSEG.BELNR, BSEG.VBELN, SUM(BSEG.WRBTR), BKPF.WAERS
FROM BSEG
JOIN BKPF ON (BSEG.MANDT = BKPF.MANDT AND BSEG.BUKRS = BKPF.BUKRS AND BSEG.BELNR = BKPF.BELNR AND BSEG.GJAHR = BKPF.GJAHR)
JOIN VBRK ON (VBRK.MANDT=BSEG.MANDT AND VBRK.VBELN=BSEG.VBELN)
LEFT JOIN T005 ON (VBRK.LAND1 = T005.LAND1)
WHERE VBRK.STCEG = '' AND VBRK.VBUND = '' AND VBRK.VBELN != '' AND VBRK.LAND1 != VBRK.LANDTX AND T005.XEGLD != '' AND BSEG.GJAHR = 2007 AND VBRK.LAND1='AT'
GROUP BY BSEG.MANDT, BSEG.BUKRS, BSEG.GJAHR, VBRK.LAND1, VBRK.LANDTX, BKPF.WAERS, BSEG.BELNR, BSEG.VBELN
We thus restrict our results to the individual amounts of the respective billing document in the foreign currency (BSEG.WRBTR) instead of the total amount. In addition, we also restrict the delivery to the country supplied (VBRK.LAND1 = ‘AT’) and the fiscal year (BSEG.GJAHR = 2007). That was pretty simple, wasn’t it? 🙂
This gives us the following extensive list of all deliveries to Austria:
| MANDT | BUKRS | GJAHR | LANDTX | LAND1 | BELNR | VBELN | SUM(WRBTR) | WAERS |
|---|---|---|---|---|---|---|---|---|
| 800 | 1000 | 2007 | DE | AT | 1400000114 | 0090036476 | 3,570,000.00 | EUR |
| 800 | 1000 | 2007 | DE | AT | 1400000134 | 0090036508 | 2,856,000.00 | EUR |
| 800 | 1000 | 2007 | DE | AT | 1400000135 | 0090036509 | 2,856,000.00 | EUR |
Due to the manageable amount of results and the correspondingly high amounts, it is certainly advisable to take a closer look at all three cases and question them accordingly.