Table of Contents

Additional Currency Exchange Rate for Calculation of VAT Amounts in a Foreign Currency on Domestic Invoices

When a foreign currency is used to post a purchase invoice with a purchase VAT amount issued by a domestic vendor and to post a sales invoice with a sales VAT amount issued for a domestic customer, it is sometimes necessary to use different currency exchange rates for converting the base and VAT amounts and the amounts of costs/revenues and payables/receivables. Polish Localization for Business Central enables using two different exchange rates for purchase and sales documents. With this functionality, the application creates two entries i.e. customer and vendor ledger entries that are split into the VAT amount in a local currency and the remaining payables/receivables amount in a foreign currency or two customer/vendor entries, both in a foreign currency.

Important

The functionality is available only on purchase/sales documents and does not apply to direct posting from general journals.

Note

The following section describes how to set up and maintain an additional currency exchange rate for VAT amount conversion, including posting the VAT amount as a separate foreign currency entry. This description is based on the example of a purchase invoice. In sales documents, the procedure is identical, so you should refer to the description related to the purchase process.

Setup

Posting a VAT Amount as a Separate Entry in a Foreign Currency

To define the settings to post the VAT amount as an additional entry in the vendor ledger:

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter Purchases & Payables Setup, and then select a related link.

  2. On the Purchases & Payables Setup page on the General FastTab, fill in the following fields:

  • Post VAT Amount as Separate Ledger Entry - Select the Foreign Currency Only value Specifies that a separate entry in the vendor ledger will be created only if the document uses the foreign currency.
  • VAT Amount Currency - Specifies the currency used in the VAT entry. Select the Local Currency value if the vendor ledger entry for the VAT amount is to be in the local currency, or the Document Currency value if the vendor ledger entry for the VAT amount is to be in a foreign currency.
  • Allowed VAT Difference - Select this field to allow the user to manually change the VAT amount for purchase documents.

G/L Account to Register Exchange Differences for VAT Amounts

If the document currency is to be used in the vendor ledger entry that is, if the VAT Amount Currency on the Purchases & Payables Setup page is set to the Document Currency, you should set up a general ledger account to record exchange differences for the VAT amount. This general ledger account must be defined separately for each VAT posting group combination. To do so:

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter VAT Posting Setup, and then select a related link.
  2. On the VAT Posting Setup page fill in the Purchase VAT Exch. Rate Diff. Acc. field for the relevant combinations of VAT posting groups.
Note

The VAT Amount Currency field has also been added to the customer/vendor card and to purchase/sales documents. The initial values of the fields shown on the cards are inherited from the sales and receivable/purchase and payable setup, and the values shown on the documents are inherited from the cards. Both card and document field values can be edited. The VAT Amount Currency field is only visible if the Post VAT Amount as a Separate Ledger Entry field is equal to Foreign Currency Only.

Manual Correction of a VAT Amount in a Foreign Currency

You may need to manually change the VAT base amount calculated by the system based on the additional exchange rate. To enable the manual correction of the VAT amount:

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter General Ledger Setup, and then select a related link.

  2. In the Max. Allowed VAT Base Difference field on the General FastTab on the General Ledger Setup page, enter the difference value that can be manually applied to change the VAT base amount that was calculated in a local currency in the posted document.

Creating and Posting a Document with a VAT Amount as an Additional Entry

When you enter a purchase invoice from a selected domestic vendor in a foreign currency, Business Central uses the default settings defined on the Purchases & Payables Setup page, and it allows you to verify and, if necessary, change the calculated values on the VAT Statistics page.

Important

The visibility of the VAT Currency Code field and the VAT Statistics action on the purchase document depends on how the document is filled out. An additional vendor ledger entry will be created only for documents that meet the following criteria:

  • the Currency Code field is filled in,
  • the VAT Transaction Type field on the VAT Business Posting Groups page is equal to Domestic,
  • the VAT Calculation Type field in the purchase document lines is set to Normal VAT;
  • theVAT Amount Currency field is filled;

To issue and post a document with the VAT amount as an additional entry in the vendor ledger:

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter Purchase Invoice, and then select a related link.

  2. On the Purchase Invoices page, on the ribbon, select New.

  3. From the drop-down list in the Buy-from Vendor No. field, select a card of a domestic vendor with a defined foreign currency.

  4. The VAT exchange rate is retrieved from the Exchange Rates page according to the VAT Settlement Datevalue entered in the purchase invoice and is initially the same as the exchange rate defined for the document. If you change the date in the VAT Settlement Date field, a request to confirm the VAT rate change is displayed.

  5. Fill in the lines of the document, and remember to set Normal VAT in the VAT Calculation Type field.

  6. If you have completed all the data correctly, the VAT Statistics action will be available.

  7. The VAT Statistics action will open the VAT Entries Preview page that shows details on the conversion of the VAT amount into the local currency according to the defined VAT exchange rate. The number of records depends on how the amount is split while it is posted to the VAT Entries table.

  8. After you review and, if necessary, correct the calculated values, close the VAT Records Preview page.

  9. On the Purchase Invoice page, select Post (or press F9) to post the purchase invoice.

As a result, when the purchase document is posted, two entries are created on theVendor Ledger Entries page:

  • in the net amount in the currency of the posted document - the Amount Type field is marked as Amount Excl. VAT,
  • in the VAT amount in the local currency, calculated based on the currency exchange rate defined for VAT - the Amount Type field is marked as VAT Amount (if the VAT Entry Currency on the document set as Local Currency), or
  • in the VAT amount in the document currency - the Amount Type field is marked as VAT Amount (if the VAT Amount Currency on the document set as Document Currency).

Other entries remain unchanged compared to standard posting.

Bank Accounts on the Posted Sales Invoice Printout

The bank account on the sales invoice can be filled in automatically based on the selected currency code.

To have the bank account details entered automatically:

  1. Choose the Lightbulb that opens the Tell Me feature icon, enter Bank Accounts, and then select a related link.

  2. On the Bank Accounts page select a default bank account.

  3. On the Bank Account Card page, select a currency in the Currency Code on the Posting FastTab, then select the Use as Default for Currency.

Note

It is necessary that the currency code is specified in the Currency Code field. You can select only one default bank account per currency.

If you do not fill in the code in the Company Bank Account Code field, the posted sales invoice is printed with the bank account data from entered based on the the Bank Name, Nr IBAN, SWIFT Code settings set on theCompany Information page.

The printouts created for foreign currency invoices with VAT conversion in a local currency show details of the two bank accounts:

  • the bank account data for the currency that was specified for the bank account set in the Company Bank Account Code field on the posted sales invoice;
  • bank account details for the local currency that was specified on the Company Informationpage.
Note

If the Company Bank Account Code field is empty in the sales document, the posted invoice for both the invoice currency and the local currency will be printed with the bank account data entered based on the settings specified on the Company Information page.

Note

For domestic invoices, bank account data are entered from the bank account set in the Company Bank Account Code field on the posted sales invoice. If you do not fill in the code in the Company Bank Account Code field, the posted sales invoice is printed with the bank account data entered from the Company Information page. The same mechanism works for foreign currency invoices without the VAT amount specified in the local currency.