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Multiple VAT registration numbers

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This article provides information about the functionality for multiple value-added tax (VAT) registration numbers. By using this functionality, you can set up the tax registration numbers of a legal entity and its customers and vendors in different countries or regions. You can then post and settle taxes according to registration in the appropriate country or region.

Here are the main steps to configure and use this functionality:

  • Assign the registration type for VAT registration to the VAT ID registration category.
  • Set up the legal entity's, customers', and vendors' VAT registration numbers on the Registration ID FastTab on the Manage addresses page.
  • Specify the legal entity's VAT registration number for the sales tax authority, and specify the settlement period. The sales tax codes that are assigned to the settlement period identify the legal entity's VAT registration.

The tax calculation feature can identify the customer and vendor VAT registration numbers for transactions. The identified tax registration numbers are available in the sales tax transactions.

The sales tax settlement procedure uses the country or region code of the registration ID.

Prerequisites

Before you begin, Tax Calculation must be configured. For more information, see Tax Calculation.

Enable the feature

  1. In the Feature management workspace, turn on the Support multiple VAT registration numbers feature.
  2. Go to Tax > Setup > Tax configuration > Tax calculation parameters, and turn on the Enable advanced tax calculation option.

Note

In the 10.0.39 update, you can no longer enable this feature through Feature management. It's now controlled by the Support multiple VAT registration numbers parameter on the Tax calculation parameters page.

To set up the VAT registration numbers for a legal entity and its customers and vendors, use the registration ID framework to create these registration numbers. For more information, see Registration IDs.

Set up registration types and categories

  1. Go to Organization administration > Global address book > Registration types > Registration types, and create a new registration type, such as VATID.

    Screenshot of the Enter registration type details dialog box.

  2. On the Applicable countries/regions, uses, and validation rules FastTab, create a registration type line for each country or region where the legal entity, customers, and vendors have registrations.

    Screenshot of registration type lines on the Registration types page.

  3. Go to Organization administration > Global address book > Registration types > Registration categories, and assign the registration types that you just created to the VAT ID registration category.

    Screenshot of registration types assigned to the VAT ID registration category on the Registration categories page.

  1. Go to Organization administration > Organizations > Legal entities.

  2. Select Registration IDs, and assign VAT ID registration to each address where the legal entity has VAT registrations.

    Screenshot of assigning VAT ID registration to addresses on the Legal entities page.

Note

To automatically identify customer and vendor VAT registration numbers for sales tax transactions, sales documents, and purchase documents, either create the numbers in the tax calculation feature on the Customer tax registration number applicability and Vendor tax registration number applicability tabs or enable the Update tax exempt number from customer address parameter on the Multiple VAT registrations tab of the Tax calculation parameters page.

To generate separate number sequences for documents such as packing slips and invoices, create a number sequence group. Then, on the Manage addresses page, on the Registration ID FastTab, on the General tab, assign the number sequence group to the VAT ID of the legal entity.

Screenshot of assigning a number sequence group to the VAT ID of a legal entity on the Manage addresses page.

Next, on the Number sequence groups page, in the Reference section, set up the required number sequence codes for the supported references.

The code for the number sequence group is then entered by default on the sales order or purchase order header after the legal entity's tax registration is determined. The documents are numbered according to the number sequences that are assigned to the references.

Screenshot of number sequence codes on the Number sequence groups page.

Note

The default logic supports only sales orders, purchase orders, and free text invoices.

Set up tax authorities

  1. Go to Tax > Indirect taxes > Sales tax > Sales tax authorities, and create all the tax authorities that the legal entity must report to.
  2. On the Tax registration FastTab, add the appropriate VAT registration number.

Screenshot of a VAT registration number added on the Sales tax authorities page.

Note

The lookup for the Tax registration number field on the Tax registration FastTab contains only the registration numbers of the legal entity that have a VAT ID registration category. The list of registration IDs is available for the corresponding country or region of the tax authority.

Date effectivity isn't supported for assigned registration numbers. If you change or expire the registration number of the legal entity, you must manually update the tax registration in the setup of the tax authority and sales tax settlement period.

Set up the sales tax settlement period

On Sales tax settlement periods, create sales tax settlement periods. In the Tax registration number field, verify that the corresponding legal entity's VAT registration number is assigned.

Screenshot of VAT ID assigned on the Sales tax settlement periods page.

Set up customer and vendor tax registration numbers in the Tax feature setup

  1. Open the tax calculation feature setup.

  2. On the Customer Tax Registration Number Applicability tab, under Applicability rules, verify that the registration IDs for customers are defined.

  3. On the Vendor Tax Registration Number Applicability tab, under Applicability rules, verify that the registration IDs for vendors are defined.

    Screenshot of customer and vendor registration IDs on the Tax feature setup page.

    Note

    This step is optional unless the customer or vendor has multiple tax registration numbers, and you want the Tax Calculation feature to determine the ID. As the default value for the customer or vendor tax registration number, the Tax Calculation feature uses the value entered in the Tax exempt number field on the header of sales and purchase documents. It replaces that default value with the value that you defined in customer or vendor tax registration number applicability rules.

    During sales tax calculation and document posting, the tax feature returns the customer's or vendor's tax registration number to Dynamics 365 Finance and updates the Tax exempt number field on the sales order or purchase order. If the corresponding value isn't set up on the Registration ID FastTab on the Manage addresses page for the customer or vendor, the registration ID is left blank, and you receive the following message: "Customer tax registration 'xxx' is not found in the customer's Registration IDs setup. To add customer tax registration to sales tax transactions and posted documents, make sure the registration is defined in the Registration IDs setup."

Sales order and purchase order processing

On the Tax calculation parameters page, make sure that the Enable advanced tax calculation option is turned on, and that Sales and Purchase are selected in the Business process field.

If you assign sales tax codes on lines that you create for a sales order or purchase order to different sales tax settlement periods and tax registrations, the order has multiple registration numbers. To control the system behavior in this scenario, the Check Tax registration number in document lines option is available on the Accounts receivable parameters and Accounts payable parameters pages.

Before version 10.0.41, the system didn't support assigning sales tax codes to different registration numbers on a sales order or purchase order. During sales tax calculation and document posting, you receive an error message and can't continue the process. For information about the item ID, sales tax codes, settlement periods, and tax registration numbers that are identified for the order lines, view the message details.

Screenshot of example error messages about different tax registration numbers on document lines.

Starting with version 10.0.41, you can create sales orders and sales quotations with lines that have different tax registration numbers. The Check Tax registration number in document lines option on the Accounts receivable parameters page still controls the level of validation: None, Warning, or Error.

Important

You can't assign multiple tax registrations to individual sales order document lines. If tax calculation determines that different tax registration numbers (VAT IDs) of the legal entity are assigned to an individual line, an error is displayed.

When you post, the system automatically splits sales orders into different sales confirmations, picking lists, packing slips, and invoices according to the VAT IDs it determines for document lines. Go to Account receivable parameters > Summary update > Split based on to select whether sales confirmation and/or picking list should be split based on the tax registration number. For packing slips and invoice postings, this option is mandatory and is set to Yes.

Temporary sales tax and posted sales tax

On the Temporary sales tax page, you can preview the identified VAT registration numbers of the legal entity, customers, and vendors. The following new fields are available on the page:

  • Tax registration number – The VAT registration number of the legal entity.
  • Customer tax registration number – The VAT registration number of the customer. This field is available only for sales orders.
  • Vendor tax registration number – The VAT registration number of the vendor. This field is available only for purchase orders.

On the Posted sales tax page, the following new fields are available. You can sort and filter sales tax transactions by these fields.

  • Tax registration number – The VAT registration number of the legal entity.
  • Counterparty tax registration number – The VAT registration number of the counterparty.

Sales tax settlement procedure updates

The Settle and post sales tax periodic task now uses the country/region code of the legal entity's tax registration.

Note

If you don't set the tax registration number for a tax period, you receive the following error message: "Tax registration number is not set up for the tax settlement period xxx" and the settlement process stops.

After the settlement process finishes, the system doesn't print a sales tax payment report. Instead, you receive the following message: "The sales tax settlement and posting is completed. The voucher 'xxxx, m/d/yyyy' has been posted."

You can still manually run the sales tax payment report by going to Tax > Inquiries and reports > Sales tax inquiries > Sales tax payments.

Note

Even if you don't enable the feature on the Tax calculation parameters page, the system copies the tax registration ID from the original sales tax transactions to the offset sales tax transactions.

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