Cash VAT Management/User Documentation

Contents 1 About this document 2 About Cash VAT 2.1 About Cash VAT in Spain 3 Installation 4 Configuration 4.1 Two independent flows: Purchase and Sales 4.1.1 Sales flow 4.1.2 Purchase flow 4.2 Cash VAT Tax Rate configuration 4.2.1 General Ledger Configuration Defaults 5 Sales flow 5.1 Sales Invoice 5.1.1 Accounting 5.2 Sales Order 6 Purchase flow 6.1 Purchase Invoice 6.1.1 Accounting 6.2 Purchase Order

About this document

This document describes the Cash VAT Management available since Openbravo 3.0MP30.

It is written as a global document to better understand this functionality from a generic point of view.

About Cash VAT

Cash VAT is a regime organizations may subscribe to, which is already available in some countries, like for example Spain or Germany.

Organizations subscribed to Cash VAT regime can settle the VAT amounts to the Tax Authorities when collecting/paying the invoices, instead of at invoice creation.

This regime may be a good option from a financial point of view, but on the other hand it may imply more effort when submitting the official tax reports. The Cash VAT Management for Openbravo tries to reduce this complexity.

About Cash VAT in Spain

Cash VAT in Spain consists on what it is called "Double Cash Criteria". This criteria implies that for an Organization subscribed to the Cash VAT regime:

• the time for sales VAT settlement is delayed until the time sales invoices are paid by the Organization's customers
• and same way the time for purchase VAT settlement is delayed until the time purchase invoices are paid by the Organization to its vendors.

Having said that, in Spain there can be organizations as the ones listed below:

• Organizations do not subscribed to this special regimen
  • In Openbravo, this scenario means that purchase neither sales invoices are set to Cash VAT

• Organizations do not subscribed to this special regimen but receiving purchase invoices from vendors subscribed to this regimen
  • In Openbravo, this scenario means that only purchase invoices can be set to Cash VAT whenever the corresponding vendor is set as a Cash VAT vendor.

• Organizations subscribed to this special regimen
  • In Openbravo, this scenario means that both purchase and sales invoices are going to be set as Cash VAT because the Organization is set as a Cash VAT organization, under Double Cash Criteria.

Moreover, it is important to remark that not all type of commercial transactions can be set as a Cash VAT transaction.
In Spain the Cash VAT regimen can not be applied to transactions such as intracommunity transactions (acquisitions and sales) or "Recargo de Equivalencia" transactions.
Therefore if your organization is subscribed to this special regimen, remember to switch off the "Cash VAT" check at invoice header level for those transactions this regimen may not apply to.

Installation

The Cash VAT Management is a feature hidden by default in Openbravo. In order to enable it, you must manually install the Cash VAT Management module, which is distributed under the Openbravo Public License.

Once installed, the Openbravo interface will show the required tabs and fields to work with Cash VAT.

Configuration

Two independent flows: Purchase and Sales

By default, the Cash VAT regime in Openbravo is deactivated for both purchase and sales flows; the user must explicitly activate it.

With the target of being as much generic as possible, the Cash VAT management in Openbravo can be configured for the sales and the purchase flow independently.
Thus an organization can declare each purchase or sales transaction as subscribed to the Cash VAT regime or not.

Moreover, in the case of the purchase flow, each of the Vendors can be declared individually as subscribed to the Cash VAT regime or not.

All this configuration allows Openbravo to cover different in countries legislation, like Spain, Germany, etc.

It is important to remark that the correct configuration for Spain, in the case of an Organization under the Cash VAT regime, is to set below two check boxes to "Yes", for the corresponding organization:

• Cash VAT
• Double Cash Criteria

Sales flow

In order to activate the Cash VAT regime for sales flow, the legal entity must be declared as subscribed to Cash VAT. Any child organization will automatically inherit this configuration.

This can be easily done at the "Organization window, "Information" tab, by setting the Cash VAT flag.

This configuration will determinate whether the Sales Order or Sales Invoice is distributed under the Cash VAT regime.

Purchase flow

The purchase flow is configured at Business Partner level. Each vendor can be subscribed or not to the Cash VAT regime.

This configuration will determinate whether the Purchase Order or Invoice is distributed under the Cash VAT regime.

Besides, when an organization is subscribed to the Double Cash Criteria, the Purchase Orders or Invoices are automatically configured to work with Cash VAT regardless the vendor definition. This configuration is done at the Organization window, Information tab, by setting the Double Cash Criteria flag. In some countries, like Spain, the Double Cash Criteria is a legal requirement when working with the Cash VAT Management, as already mentioned.

Cash VAT Tax Rate configuration

When an invoice is initially posted, the VAT amounts are posted to transitory tax accounts (Tax Due Transitory and Tax Credit Transitory). As an exception, if the invoice contains a prepayment, for example from an already paid order, the accounting will not use the transitory tax accounts but the final ones.

When the invoice is partially or fully paid/collected through a payment/transaction/reconciliation, the tax amounts are moved from the transitory accounts to the final ones.

Each Cash VAT Tax Rate must define itself as a Cash VAT tax rate. This is configured with the Cash VAT flag at Tax Rate window.

Apart from that, any Cash VAT tax rate must also define the transitory tax account that will be used when posting any document that contains it. This can be done at the Accounting tab.

If a cash VAT doesn't have the correspondent Tax Transitory Account, the document posting will fail.

General Ledger Configuration Defaults

A default Tax Due and Tax Credit Transitory account can also be defined at the Defaults tab at the General Ledger Configuration window

Sales flow

Sales Invoice

A new flag called Cash VAT can be found at the Sales Invoice Header under the More Information section.

This flag declares the invoice is distributed under the Cash VAT regime. It is automatically set by the system depending on the legal entity's configuration, and can be manually overridden by the user afterwards. All the tax rates included into the invoice but exempt VAT tax rates and withholdings, must honor the Cash VAT declared at the header, otherwise the system won't allow to complete the invoice.

A new tab called Cash VAT is displayed only for this kind of invoices under the Tax tab. Each time the invoice is partially or totally collected, the system automatically inserts a line with the percentage of the tax collected in each payment. This information can be used afterwards for generating tax reports with Cash VAT support.

Accounting

When a Cash VAT invoice is posted, the transitory tax accounts are used. Here you have an example of a Cash VAT Sales Invoice accounting:

Finally, when the payment/transaction/reconciliation is posted (depending on the Payment Method configuration), the accounting engine will automatically move the correspondent tax amount from the transitory account to the final one. Here you have an example of the accounting generated by a transaction linked to a cash vat invoice:

Sales Order

A new flag called Cash VAT can be found at the Sales Order Header under the More Information section.

The behavior is similar to the Sales Invoice one, and it declares that the invoice to be created based on this order will be distributed under the Cash VAT regime.

Note that any billing process (even the customized ones) will transparently populate the invoice's cash vat from the order's configuration, so it won't be necessary to adapt any billing process you may be using before cash vat.

Purchase flow

Purchase Invoice

A new flag called Cash VAT can be found at the Purchase Invoice Header under the More Information section.

This flag declares the invoice is distributed under the Cash VAT regime. It is automatically set by the system depending on the business partner's or the legal entity's configuration, and can be manually overridden by the user afterwards. All the tax rates included into the invoice must honor the Cash VAT declared at the header, otherwise the system won't allow to complete the invoice.

A new tab called Cash VAT is displayed only for this kind of invoices under the Tax tab. Each time the invoice is partially or totally paid, the system automatically inserts a line with the percentage of the tax paid in each payment. This information can be used afterwards for generating tax reports with Cash VAT support.

Accounting

When a Cash VAT invoice is posted, the transitory tax accounts are used. Here you have an example of a Cash VAT Purchase Invoice accounting:

Finally, when the payment/transaction/reconciliation is posted (depending on the Payment Method configuration), the accounting engine will automatically move the correspondent tax amount from the transitory account to the final one. Here you have an example of the accounting generated by a transaction linked to a cash vat purchase invoice:

Purchase Order

A new flag called Cash VAT can be found at the Purchase Order Header under the More Information section.

The behaviour is similar to the Purchase Invoice one, and it declares that the invoice to be created based on this order will be distributed under the Cash VAT regime.

Note that any billing process (even the customized ones) will transparently populate the invoice's cash vat from the order's configuration, so it won't be necessary to adapt any billing process you may be using before cash vat.