our chartered accountant pointed out the inconsistency (he defined it an incorrect accounting under Italian law but I know that maybe in other countries this could be different…) in the reporting between Tax Summary and Tax Transactions for transactions under reverse charged tax code.
In order to meet the Italian legal requirements he required also the Tax Transaction report to show the identical amount on tax on sales and tax on purchases for each invoice.
This would also make the two report totals consistent as they should be.
He also asked to have the same columns in both report, ie to add Net Sales, Net Purchases and Tax Liabilities to Tax Transactions.
Here I am again.
Is there any plan to make reverse charge tax registration compliant to law?
Reverse charge doesn’t mean that is tax exempt but that you have this tax accounted both on Tax on Sales and Tax on Purchases.
This mean that it shouldn’t appear only in Tax Summary but everywhere, ie also in the Tax Transactions and also in the BS.
About BS… I know that the effect is neutral but Manager should register both the debit and the credit.
Right now, reverse charged tax codes do not create appropriate entries in general ledger but I can see logic in this.
Dear @lubos, any solution about this? My chartered auditor is stressing so much…
Hi Davide, I can only add that this would be to great benefit to all EU countries and also Switzerland.
The fix seems easy enough as it requires a simple double entry at the reverse tax rate. It will allow absolute transparency for the tax authorities (removing any difficulty in explaining the reconciliation between the accounting records and the tax reports).
Finally, it will keep all chartered auditors at ease, and being one myself - I believe this point cannot be stressed enough
Improved in the latest version (20.8.65).
Reverse charged tax codes now make actual reversing debit/credit into tax liability account. This means you will need to edit your tax code and select an actual tax account (e.g.
Tax liability) otherwise reversing transaction will be made into
But what happend to all the amounts in Custom Reports? Net Sales, Tax on Sales, Total Sales, Net Purchases, Tax on Purchases and Net Purchases all disappeared in custom reports.
dear lubos, could you post an example please that shows how it should work ?
and what the result should look like ?
can t see any postings to the selected tax account,
and numbers that used to show up in the tax summary for tax on purchase
and tax on sales are gone.
( missed update to 20.8.65 but updated to 20.8.67 )
@WZM when you edit tax code, what tax rate do you have under
Reverse charged checkbox?
@lubos: screenshot General Ledger Transactions Report
Everything works fine in standard reports
@Davide, @lubos, it does not work here in version 20.8.67
i started over with an empty business backup, no changes.
uninstalled version 20.8.67 an reinstalled version 20.8.62
Reverse Charge numbers show in Tax Summary Standard Report
any ideas what might be wrong ?
@WZM could you test in completely empty business what you get?
@lubos, i started a new business from scratch. it works fine.
emptied an existent testbusiness except for 3 suppliers and 3 customers, double checked
all tax codes.
started by adding a test inventory item. created 1 purchase invoice from domestic supplier
with standard input tax 19% and 1 PI from a EU supplier with Reverse charge 19%.
no values in Tax Summary and no transactions in GL
for Reverse Charge Tax Code see earlier uploaded picture
@WZM, you have made a confusing series of posts:
- Post #10 shows a Tax Summary for a time period ending August 7th. That was before the reverse charge scheme changed. Based on your later posts, it is not clear which version of the program generated this report.
- Post #11 is only a fragment of a General Ledger Transactions report. It is impossible to know what this should show, as purchase invoice #2 was not illustrated.
- Post #13 compares Tax Summary reports from two versions of the program. But they are also for different date ranges.
- Post #15 says you started over by emptying an existing test business and double-checked all tax codes. But you did not illustrate your age 19% tax code from this business. You only illustrated it from a different business in Post #10.
- Post #15 shows the Summary from a test business with no transactions after you said you entered two purchase invoices. You appear to have hidden zero-balance accounts, making it impossible to know how this test business is set up.
- Post #15 shows a fragment of a General Ledger Transactions report, again making it impossible to know what has happened.
To tell what is going on, it will be necessary for you to post the following screen shots from the new test business:
- Edit screen for your igE 19% tax code
- Edit screen for the purchase invoice for the EU supplier
- Summary showing all accounts
- General Ledger Transactions report for all accounts
screenshots as requested
Summary showing all accounts
second set of screenshots
Edit screen for your igE 19% tax code
Edit screen for the purchase invoice for the EU supplier
General Ledger Transactions report for all accounts
@WZM, are you absolutely certain everything you have shown from your new test business is using version 20.8.67? I have duplicated equivalent entries in a test business and do not get the same results you do. Your results only seem to be available from versions before 20.8.65.
@tut, I can confirm, that I used ver 20.8.67.
I suspect something to be corrupted in the Tax Code settings
I erased again all transactions from this business and also
deleted the Reverse Charge Tax Code igE 19% and created
a new one with the same settings, created a new purchase invoice
and applied the Reverse Charge Tax Code igE 19%.
General Ledger Transaction and Tax Summary reports show ok now.
I still have this test business file on another pc running ver 20.8.63.
created a backup, imported it into manager on another computer
running ver 20.8.67. does not work.
would you like to have this file for further investigation ?
just thought of the problems if something like this happens with
a business file, that has hundreds or even thousends of transactions