1. Using Financials for EMEA
  2. Split Invoices for VAT Payment in Local Currency

Split Invoices for VAT Payment in Local Currency

To comply with local regulatory requirements, you must report foreign currency invoices in some countries, such as in Poland, with the VAT amount reported in the local currency.

Use the split payments feature for foreign currency invoices with a VAT tax line into 2 payments. Use one for the line amount in the foreign currency and the other for the VAT amount in the ledger currency. This allows the payee bank to credit the VAT amount in the ledger currency to a separate bank account.

You must enable the split payment feature and then create the invoice with the payment method and pay group created specifically for VAT split payments.

Create VAT Installments

  1. Enter the line details and then click Actions > Manage Installments.
  2. Select the pay group as VAT Split Pay Group. A read-only field with the column heading VAT Split Bank Account appears at installment level.
  3. Create 2 installments: one with the VAT lines total amount, and the other with the invoice total amount balance.
  4. Select payment method as VAT Split Payment Method. This enables the VAT Split Bank Account field. Its default value is based on the supplier bank account setup. You can modify the value.

Set off a Credit Memo with a VAT Split Installment Marked as Pay Alone

Enable the Pay Alone option for the VAT split installments. This lets you handle the VAT split bank account details. Oracle Payables creates a separate payment for each invoice that’s marked as pay alone, instead of combining them with other standard invoices or credit memos.

You can adjust a VAT-specific credit memo against the VAT-specific standard invoice (set as Pay Alone). On the Create Payment page, you can associate a standard invoice with a credit memo, if both are created with the same VAT-specific payment method.

Adjust Prepayment Against a Standard Invoice with VAT Split Installment

Prepayment invoice is created without VAT lines. When you apply a prepayment against a standard invoice with VAT and line items, the amount is automatically adjusted off against the line installment or a VAT installment. To prevent this from happening, create the VAT installment with a later due date. While applying the prepayment, the application automatically adjusts the amount against the earlier due date installment.