COUNTRY SPECIFIC – EXAMPLE FOR DENMARK

Some purchases and sales are not subject to VAT. There are also occasions when there is no need to calculate VAT, for example, when passing on freight costs. Uniconta allows the user to include both items that are, and items that are not subject to VAT on the same invoice.

This article describes how to handle items that are not subject to VAT.

In order to bill goods and services without VAT, they must first be set up with: 

• A 0% rated VAT code for both VAT payable and receivable.
• A product group that is, for example, VAT-free with VAT code rates of 0%.
• Item numbers with VAT-free item groups.
• Customer and Vendor groups set to post by item.
• Revenue accounts in VAT-free item groups must be ‘sales’ accounts. Purchase accounts must be ‘expense’ accounts. Otherwise there will be an error upon invoicing.
• General Ledger accounts that VAT-free goods are posted to (indicated in item groups as ‘VAT-free’), must have ‘Optional’ selected in the ‘Forced VAT’ field.

This article describes how to achieve the above by setting up:

• VAT codes with a 0% rate.
• VAT-free item groups.
• Item numbers without VAT calculations.
• Posting by item and not by Customer/Vendor.
• Setting up purchase and sales accounts in VAT-free item groups.
• The optional ‘Forced VAT’ field on purchase and sales accounts.

VAT codes with a 0% rate

Use the navigation panel to go to General Ledger/Maintenance/VAT.  Set up a VAT code at a rate of 0%, as shown in the example below; one for sales and one for purchases.

Sales VAT code ‘NOVAT’ (VAT-free)

(Click on screenshot to enlarge.)

VAT type: Payable VAT

Calculation base: Gross amount

Rate: 0.00

Ledger account: Must be provided in order to update the invoice even though no amount is posted. The account used should be ‘Payable VAT’ as shown in the screenshot above.

Purchase VAT code ‘PurchNOVAT’ (VAT-free purchases)

(Click on screenshot to enlarge).

VAT type: Receivable VAT

Calculation base: Gross amount

Rate: 0.00

Ledger account: Must be provided for the purchase invoice to be updated, even though the amount will not be posted. The account used should be ‘Receivable VAT’.

VAT-free item groups

Use the navigation panel to go to Inventory/Maintenance/Item groups. Set up an item group for NOVAT, as shown in the example below.

(Click on the screenshot to enlarge.)

Item numbers without VAT calculations

Use the navigation panel to go to Inventory/Items.  Set up a VAT-free item, such as VAT-free freight shown below:

(Click on the screenshot to enlarge).

Group: VAT-free (this Danish example reads ‘Momsfri’ for VAT-free). The item number is used for both purchases and sales, since there is a 0% rated VAT code on both purchases on sales in the item’s ‘VAT-free’ item group.

Posting by item rather than by Customer/Vendor

Purchases and sales must be accounted for by item and not by Customer or Vendor. This allows VAT to be calculated and invoiced at different rates for the same customer/vendor.

‘Turnover posting’ is set up in Customer groups. ‘Purchase posting’ is set up in Vendor groups as described below.

Turnover posting

Use the navigation panel to go to Customer/Maintenance/Customer groups.  Select all customer groups that require different VAT codes on the same invoice. Set these to ‘Turnover posting’ by item, as shown in the example below.

(click on the screenshot to enlarge.)

The Customer group can be edited by clicking ‘Edit’ in the toolbar/ribbon and editing the ‘Turnover posting’ dropdown menu to select ‘Item groups’, as shown in the screenshot below.

Purchase posting

Use the navigation panel to go to Vendor/Maintenance/Vendor groups. Just as for Turnover posting described above, select all vendor groups that require different VAT codes on the same invoice for. Set these to ‘Purchase posting’ by item, by clicking on ‘Edit’ in the toolbar/ribbon, as shown in the example below.

Setting up purchase and sales accounts in VAT-free item groups.

In the VAT-free item groups it is important that the purchase account is an expense account and the sales account is an income account. Otherwise the invoice cannot be updated and posted.

Optional ‘Forced VAT’ field on purchase and sales accounts

It is also important that purchase and sales accounts are set up as follows: The ‘Forced VAT’ field is ‘Optional’ as it is, for example, in the sales account number 1030 in the example below.