Turnover Reporting for Italy

Assumptions and Prerequisites

The following entities are assumed to have already been set up :

Data Security – Refer to the Fusion Security topical essay available on cloud.oracle.com
Geographies
Enterprise Structure
Tax Regime to Rate setup
Tax Party Profiles
Tax Rules
Suppliers
Customers
Document sequences
Procurement Business Function
Common Options for Oracle Payables and Oracle Receivables
Receipt Classes and Methods

It is recommended that the Implementation Project is complete for your organization before commencing the Feature Specific Setup outlined below.

Feature Specific Setup

Service Codes

Setup service codes that represent the types of services purchased and sold. These are required to report to the Tax Authorities in the declarations. The reports require that Service Codes are entered for your reportable transactions. The list of 6 digit codes can be found on the Eurostat website. Create the Service codes that apply to your sales and purchase of services for your business. Here’s how to create the lookup codes for your service code:

Navigate to Manage Standard Lookups task.
Query up Lookup Type JG_ESL_EPL_SERVICE_CODE.
Create Lookup Codes for each 6 digit Service Code that applies to your business.

Note: Service Codes must be assigned to the transactions, so they can be reported in the ESL or EPL of Services for Italy Report. The Turnover Reporting Selection Process extracts transactions without Service Codes, but the reports do not include transactions without the Service Code assignments.

Tax Reporting Types and Codes

Tax Reporting Types and codes are required to identify and group your intra EU transactions. The reports will then display the invoices for your Tax Reporting Type and Code combination. Here are the steps to set up Tax Reporting Codes:

Navigate to the Manage Tax Reporting Types task.
Set up Tax Reporting Codes for each report, to group your transactions for reporting purposes.
Assign the tax rates that relate to your Intra EU transactions.

Tax Rate Setup

The Tax Reporting Types and Codes need to be associated with the tax rates that apply to your intra-EU transactions. This ensures that the Turnover Reporting process can identify the transactions eligible for reporting. Here are the steps to set up the tax rate:

Navigate to the Manage Tax Rates and Tax Recovery Rates task.
Assign the Tax Reporting Codes to the tax rates that relate to your Intra EU transactions.
Specify a Tax Reporting Type and a Tax Reporting Code so that the report can identify which transactions relate to your Intra EU Transactions. Both (European Purchase Listing of Services for Italy and European Sales Listing of Services for Italy) reports require you to run by a Tax Reporting Type and a Tax Reporting Code. Therefore, the tax rate codes that relate to your Intra EU Transactions need to have the Tax Reporting Type Code associated with the tax rate.

Global Descriptive Flexfield (GDF) for Italy EPL and ESL Reporting

The 2 reports (EPL and ESL of services for Italy) have Global Descriptive Flexfields (GDF) enabled on the following user interfaces:

Payables Invoice Header
Payables Invoice Line
Receivables Transaction Header
Receivables Transaction Line.

The purpose of the Global Descriptive Flexfield (GDF) is to allow you to add additional information on the transactions that are required for reporting to the authorities. In particular:

Service Code	Available at both Header and Line levels. Composed of 6 digits in length, this field must be populated with the CPA 2008 service classification ( European Economic Communityhttp://ec.europa.eu/eurostat/ramon/nomenclatures/index.cfm?TargetUrl=LST_NOM_DTL&StrNom=CPA_2008&StrLanguageCode=EN&IntPcKey=&StrLayoutCode=HIERARCHIClisting Statistical Classification of Products by Activity). The values for the Service Code are defined in the step above in the Service Codes setup section.
Service Mode	Available at both Header and Line levels. Indicates if the Service is continuous/consecutive or the Service is one-off/ad-hoc, the values are R for continuous/consecutive and I for one-off/ad-hoc.
Reporting Payment/Receipt Method	Available at Header level only. Payment and Receipt Methods on the transaction can either be classified as Direct Debit, Transfer Order, or Others.
Reporting Payment/Receipt Country	Country of the third party to which the payment/receipt is made.

Values entered at the line level take precedence. If there is no value at the line level, then the header level values will be reported. This allows you to enter for example 10 invoice lines for a particular service code/service mode, but only need to enter the GDF data at the invoice header level. If there are just 1 or 2 invoice lines that relate to a slightly different ‘Service Mode’ or ‘Service Code’ then you can enter the value for that line at the line level. Invoices and transactions that are intra EU which you want to declare on the listings must have the GDF information entered for them to be reported.

Invoice Entry in Payables

Enter invoices with the following characteristics, to ensure that they are correctly represented in the European Purchase Listing of Services for Italy report. Navigate to the Create Invoice task to create an invoice and pay special attention to the following:

Voucher Number: A Voucher Number needs to be generated in the Accounting Tab section. Voucher Numbers appear on the report output as Invoice Protocol Number. Set up a gapless document sequence to achieve this. Italy requires gapless document sequencing.
Invoice Header Level GDF: The Service Code, Service Mode, Reporting Payment Method, and Reporting Payment Country are selected at the invoice header level. Click on the Additional Information tab on the Invoice Header and select the European Purchase Listing of Services for Italy context from the Regional Information. The data entered for these 4 values, will appear on the report output. If you do not select the data in the GDF section, the transaction will not appear on the report.
Payables Invoice Line GDF: If you have any invoice lines that have different values for Service Code or Service Mode than what you have entered at the Invoice Header level, select the values on the Invoice Lines GDF from the Details section of the invoice line. The values at the line level will take precedence. If there are no values at the line level, then the header level information will be reported. This is an optional task that depends on the nature of your transaction.
Tax Rate Name: The transaction needs to be an Intra-EU transaction that will have the tax rate code applied that relates to Intra-EU purchases of services.
Validating, Accounting and Posting: Validate the invoice and Account and Post to Ledger. The report only shows invoices that are validated and accounted.

Transaction Entry in Receivables

Navigate to the Create Transactions task and enter transactions with the following characteristics, to ensure that they are correctly represented in the European Sales Listing of services for Italy report:

Document Number: A Document Number needs to be generated. Document Numbers appear on the report output as Invoice Protocol Number. Set up a gapless document sequence to achieve this. Italy requires gapless document sequencing.
Receivables Transaction Header Level GDF: The Service Code, Service Mode, Reporting Receipt Method, and Reporting Receipt Country are selected at the transaction header level. Click on the Miscellaneous tab on the Transaction Header and select the European Sales Listing of Services for Italy context from the Regional Information. The data entered for these 4 values, will appear on the report output. If you do not select the data in the GDF section, the transaction will not appear on the report.
Receivables Transaction Line GDF: If you have any transaction lines that have different values for Service Code or Service Mode than what you have entered at the Transaction Header level, then select the values on the Transaction Lines GDF from the Details section of the transaction line. The values at the line level will take precedence. If there are no values at the line level, then the header level information will be reported. This is an optional task that depends on the nature of your transaction.
Tax Rate Name: The transaction needs to be an Intra EU transaction that will have the tax rate code applied that relates to Intra EU sales of services. In this example, the IT VAT Intra EU Zero Rate is applied. The tax rate applied must be the tax rate that has the Tax Reporting Code associated with the previous setup step.
Completing, Accounting and Posting: Complete the transaction and Account and Post to Ledger. The report only shows transactions that are completed and accounted.

Reporting

Payables Turnover Reporting Selection Process (Preliminary Mode)

The Turnover Reporting Selection process is a prerequisite process that extracts the eligible intra EU transactions for the reporting period.

Navigate to the Scheduled Processes.
Select the transactions that you wish to report for the legal entity for a period. It is strongly advisable to run it in Preliminary Mode first, so that if necessary you can modify your data before you submit it to the Tax Authority.
Run the process for your Legal Entity.
Select Other as the Reporting Group.

Note: Although there is no report produced for the Turnover Reporting Selection Process, you can verify the list of transactions that are selected, by viewing the log file which lists the transactions. Also, you can submit the European Purchase Listing of Services for Italy report.

European Purchase Listing of Services for Italy (Preliminary Mode)

After you have extracted the transactions, review the results in the European Purchase Listing of Services for Italy report. Run the report for your Tax Registration for the period that you selected in the Turnover Reporting Selection Process. Choose the Tax Reporting Type and Tax Reporting Code that you set up earlier.

Before proceeding to run the Turnover Reporting Selection Process in Final Mode, it is important to review the European Purchase Listing of Services for Italy report output that was previously run. If there are transactions that you expect to be reported that aren’t in the report, check the setup and verify the GDF data is correctly populated for the invoices and the correct tax rate is on the transaction.

Payables Turnover Reporting Selection Process (Final Mode)

Once you have verified the preliminary report output, you can proceed to run the Turnover Reporting Selection Process in Final Mode. Use the same set of parameters that you used when running in Preliminary Mode, except choose Selection Mode as Final.

Note: Although there is no report produced for the Turnover Reporting Selection Process, you can verify the list of transactions that are selected, by viewing the log file which lists the transactions. Also, you can submit the European Purchase Listing of Services for Italy report.

European Purchase Listing of Services for Italy (Final Mode)

After you have extracted the transactions in Final Mode, you can view the results in the European Purchase Listing of Services for Italy report. You run the report for your Tax Registration for the period that you selected in the Turnover Reporting Selection Process. Choose the Tax Reporting Type and Tax Reporting Code that you set up earlier.

The report represents the Intra EU transactions for the period that need to be reported to the Tax Authority. The output will list all transactions belonging to the period that is validated, accounted, posted, and also have the Service Code, Service Mode, Payment Method, and Country of Payment entered.

Payables Turnover Declaration Closure Process

After you have received the Declaration Number back from the authority, the final step is to run the Turnover Declaration Closure Process to record the details of the finalized declaration. This process assigns the declaration number to your reported transactions. It assists identification of reported transactions and enables transactions to be reported again, if they have changed since the original declaration.

Section 4 of the report output will list the modified transactions that were previously reported. Run the Turnover Declaration Closure Process. Once the closure process has taken place, the declaration for the period is complete.

Payables Reporting Adjustments

After an invoice has been finally reported and the declaration closure process has been completed, further adjustments to the invoice will result in the being re-reported in a future period. The following examples represent such changes:

Cancelled Invoices
Credit Memo Application
Change in the Service Code, Service Mode, Reporting Payment Country or Payment Method

Such changes are reported in the Rectifications to Services received and reported in previous periods section of the report. The declaration details from the previous invoice are referenced, so that the authority can cross check the reference.

Receivables Turnover Reporting Selection Process (Preliminary Mode)

The Turnover Reporting Selection process is a prerequisite process that extracts the eligible intra EU transactions for the reporting period. Select the transactions that you wish to report for the legal entity for a period. It is strongly advisable to run it in Preliminary Mode first so that if necessary you can modify your data before you submit it to the Tax Authority. Run the process for your Legal Entity. Select Other as the Reporting Group.

Note: Although there is no report produced for the ‘Turnover Reporting Selection Process’, you can verify the list of transactions that are selected, by viewing the log file which lists the transactions. Also, you can submit the ‘European Sales Listing of Services for Italy’ report.

European Sales Listing of Services for Italy (Preliminary Mode)

After you have extracted the transactions, you can review the results in the European Sales Listing of Services for Italy report. Run the report for your Tax Registration for the period which you selected in the Turnover Reporting Selection Process. Choose the Tax Reporting Type and Tax Reporting Code that you set up earlier.

Before proceeding to run the Turnover Reporting Selection Process in Final Mode, it is important to review the European Sales Listing of Services for Italy report output that was previously run. If there are transactions that you expect to be reported that aren’t in the report, you may need to check the setup, and the GDF data is correctly populated for the invoices and the correct tax rate is on the transaction.

Receivables Turnover Reporting Selection Process (Final Mode)

Once you have verified the preliminary report output, you can proceed to run the Turnover Reporting Selection Process in Final Mode. Use the same set of parameters that you used when running in Preliminary Mode, except choose Selection Mode of Final.

Note: Although there is no report produced for the Turnover Reporting Selection Process, you can verify the list of transactions that are selected, by viewing the log file which lists the transactions. Also, you can submit the European Sales Listing of Services for Italy report.

European Sales Listing of Services for Italy (Final Mode)

After you have extracted the transactions in Final Mode, you can view the results in the European Sales Listing of Services for Italy report. Run the report for your Tax Registration for the period that you selected in the Turnover Reporting Selection Process. Choose the Tax Reporting Type and Tax Reporting Code that you set up earlier.

The report represents the Intra EU transactions for the period that need to be reported to the Tax Authority. The output will list all transactions belonging to the period that is validated, accounted, posted and also have the Service Code, Service Mode, Receipt Method, and Country of Payment entered.

Receivables Turnover Declaration Closure Process

After you have received the Declaration Number back from the authority, the final step is to run the Turnover Declaration Closure Process to record the details of the finalized declaration. This process assigns the declaration number to your reported transactions. It assists identification of reported transactions and enables transactions to be reported again, if they have changed since the original declaration.

The report output will also list the modified transactions that were previously reported. Run the Turnover Declaration Closure Process. Once the closure process has taken place, the declaration for the period is complete.

Receivables Reporting Adjustments

After a transaction has been finally reported and the declaration closure process has been completed, further adjustments to the transaction will result in the being re-reported in a future period. The following examples represent such changes :

Cancelled transactions
Change in the Service Code, Service Mode, Reporting Receipt Country or Receipt Method

Such changes are reported in the Rectifications to Services received and reported in previous periods section of the report. The declaration details from the previous invoice are referenced, so that the authority can cross check the reference.