Applying 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.