VAT Adjustment for Write-Offs

This section provides an overview of applying a VAT adjustment on a write-off. For French business transactions, the VAT final balance should be zero after a write-off when the write-off is due to bankruptcy. For write-offs that are due to reasons other than bankruptcy, a VAT final balance must be established, regardless of the VAT declaration point.

To apply the VAT adjustment on write-offs:

• For each business unit using VAT adjustment (for example, French business units), select the VAT Adjustment for WO (write-off) check box on the Receivables Definition - Accounting Options 2 page (Set Up Financials/Supply Chain, Business Unit Related, Receivables, Receivables Definitions, Accounting Options 2).

• If specific entry reasons are due to bankruptcy, select the Bankrupt check box for the applicable Entry Reasons on the Automatic Entry Type - Selection page (Set Up Financials/Supply Chain, Product Related, Receivables, Payments, Automatic Entry Type, Selection). This option is available only for system functions MT-02, MT-03, and WS-09.

When the VAT Adjustment for WO check box is deselected, the Bankrupt option has no effect on the accounting for write-offs, and the write-off accounting entries are done as described in the VAT Calculations for Write-Offs section in this topic.

See also VAT Calculations for Write-Offs.

This example has two scenarios:

• Invoices with VAT declaration point set to Invoice, Accounting Date, or Delivery.

• Invoices with VAT declaration point set to Payment.

This example has two scenarios:

• Invoices with VAT declaration point set to Invoice, Accounting Date, or Delivery

• Invoices with VAT declaration point set to Payment