Microsoft Dynamics 365 Business Central

VAT Posting Groups

Every company collects and pays taxes to various tax authorities. The rules and rates vary for countries, states, counties, and cities, and must be updated periodically as tax authorities change their requirements.

 NOTE

Value-added tax (VAT) is mostly used in the European countries, while sales tax is used in the United States. This article provides information on how to set up VAT in Dynamics 365 Business Central. If you use Dynamics 365 Business Central NA localization, you can set up only sales tax, the VAT settings will not be available.

Set up VAT

VAT must be associated with both, VAT business posting group of a customer and VAT product posting group. VAT is calculated only for the VAT posting group codes that are included in both, VAT business posting group and VAT product posting group.

Step 1: Set up VAT Business Posting Groups and VAT Product Posting Groups. Choose the Search for Page or Report icon and enter VAT Posting Setup.

In the VAT Posting Setup window configure the combinations of VAT Business Posting Groups and VAT Product Posting Groups. For each combination, you should fill in a VAT %. You can set up as many combinations as needed.

Step 2: Open the customer card of the required customer and on the Invoicing FastTab select the appropriate VAT Business Posting Group.

From the customer card you can also control whether a customer should see prices including tax or excluding in the Sana webshop. If you select the Prices Including VAT checkbox on the Invoicing FastTab, a customer will see all item prices in the webshop including tax.

Step 3: Open the item card of the required item and on the Costs & Posting FastTab select the appropriate VAT Product Posting Group.

VAT is calculated when there is a match between the VAT posting group codes from the VAT Business Posting Group assigned to the customer and the VAT posting group codes from the VAT Product Posting Group assigned to the item. If there is no match, VAT will not be applied to the sales order.

In Dynamics 365 Business Central VAT is applied to each sales order line. Therefore, some extra taxes can be calculated. For example, if a service charge is applied to the sales order it is posted on a G/L account. G/L accounts in Dynamics 365 Business Central can also store a combination of VAT Business Posting Group and VAT Product Posting Group.

If there is a relevant combination set for the G/L account, VAT will be applied to the corresponding sales order line.

VAT from Dynamics 365 Business Central is triggered in the shopping cart of the Sana webshop.

From Sana Admin you can control presentation of taxes in the shopping cart of the Sana webshop. For more information about how to change presentation of sales taxes in the shopping cart, see "Taxes".