1644 days. Or 4,5 years. That’s how long it took the United Kingdom (UK) and European Union to finally reach an agreement after the British voted for a Brexit. As of December 24, 2020, the Brexit has become a fact. And, since the beginning of this new year, the UK is no longer a member of the EU. The new partnership has a profound impact on the way we do business with our overseas neighbours from now on. What does this mean for your SAP Business ByDesign Solution? We’ll break it down for you in this blog. Step by step.
Impact on SAP Business ByDesign
The new partnership between the UK and the EU is not only about fishing quota, work permits, and border control. It also has effect on how you enter the data of your commercial activities in the UK into your SAP Business ByDesign solution. The most challenging changes you will encounter in regard to your SAP system, are these four major topics:
1. Northern Ireland Protocol
2. VAT Reporting
3. Intrastat Reporting
4. Special Invoice number ranges
If you want to dive into the entire Brexit agreement, you can find the entire treaty here: “Agreement on the withdrawal of the United Kingdom of Great Britain”.
1. Northern Ireland Protocol
The Northern Ireland Protocol was introduced as part of the Withdrawal Agreement and this means that the Northern Ireland region of UK will still be considered as part of the EU trade and customs zone.
For SAP Business ByDesign, the following changes have been implemented:
- If you have customers and suppliers in GB and in particular Northern Ireland regions, you will have to check and maintain correct postal codes. ByDesign will be using postal codes to determine if good shipment is happening to Northern Island Regions for Tax determinations. Please ensure that the postal codes are duly maintained in the address definitions of your customer master data.
- A new Tax Number Type is introduced: ‘Northern Ireland Protocol: VAT Reg. No.’, which you will have to maintain in the event of business transactions in Northern Ireland regions. This new Tax number type has the same validations as the current GB VAT tax number type.
Please note these changes can be mass maintained via the ‘Mass Data Maintenance’ work centre.
2. VAT Reporting & VAT Returns
To comply with VAT reporting for the UK after 1st of January 2021, four new tax codes have been implemented in your ByDesign system for scenarios of exempt, zero and reverse charge functionalities for 5%, and 20% VAT rates.
VAT reporting will be based as follows:
- Box 1 – Include the VAT due in this period on imports accounted for through postponed VAT accounting;
- Box 4 – Include the VAT reclaimed in this period on imports accounted for through postponed VAT accounting;
- Box 7 – Include the total value of all imports of goods included on your online monthly statement, excluding any VAT
If order/invoice/transaction is from or to a customer/supplier who has an address with country GB, the system will further check postal codes to determine if it should be treated as EU or Export/Import Transaction.
The correct tax code is further determined based on the tax date in the supplier or customer invoice item level. When you make a new invoice in 2021 for a delivery that has been received/send in 2021, the tax code determination will automatically take the new rules into account.
In case of older transactions which are processed in 2021 you can manually change the tax date to ensure the right tax code is taken into account.
Tax date is equal to the posting date of the supplier invoice. If you want to change the tax date, you can change the posting date and it will be automatically updated.
Posting date is automatically replicated to Tax date on item level.
Tax date is equal to the posting date of the invoice request. Posting date is by default equal to the invoice date, but can be changed manually.
If you want to change the tax date, you can change the tax date on item level:
Create Invoice, but before you save –> view all mode –> Items –> Taxes, change the tax date.
Note: If you have ‘old’ open invoice requests or when you cancel/void old invoices, the original VAT code will be taken into account.
3. Intrastat reporting
Depending on your customer specific solution for Intrastat reporting, don’t forget to exclude the UK related transactions (England, Scotland and Wales) from your Intrastat reports.
4. Invoice Numbering
In some countries there are invoice number rules for transactions within EU (for example Italy, France, Mexico and India). If such a rule is maintained, then the system will not allow an invoice having both material and service because of Northern Ireland Protocol impact.
Discuss with our experts
Hopefully, you can tackle the first Brexit-induced changes in your SAP Business ByDesign solution with this to-the-point breakdown. Do you still have questions, or do you want to discuss the impact of the new partnership between the UK and EU further with one of our experts? Just contact us through the form below. We are happy to help you out!