Italy: Changes in VAT management by L.D. 119 of 23 Oct 2018 on Dynamics 365 for Finance and Operations v.10.0.6, v.7.3

Applies to: Dynamics 365 for Finance and Operations

Introduction


On 23rd of October 2018 in Italy the Law Decree119 (L.D.119/2018) introduced a change in value-added tax (VAT) management inItaly that takes effect on July 1, 2019. Here is a summary of the change:

  • VAT payerscan recover the input VAT in the VAT settlement for the month when the VATpoint is triggered, even if the purchase invoice is received and recorded in theinput VAT ledger before the fifteenth day of the next month. This rule doesn’tapply to transactions where the VAT point is triggered in a fiscal year thatdiffers from the fiscal year in which the purchase invoice is received.
  • Forsupplies of services and supplies of goods, the invoice can be issued by the fifteenthday of the month after the month in which the VAT point was triggered. Invoicesthat are issued and booked before the fifteenth day of the month after the monthin which the VAT point was triggered must be included in the VAT settlement ofthe previous month.
  • Currently,invoices must be issued no later than the VAT point of the transaction (that is,the date of the delivery for the domestic sales of goods). In particular,invoices can be issued up until midnight of the day when the VAT point wastriggered. Starting on July 1, 2019, the invoice can be issued within 10 days ofthe VAT point. If the invoice isn’t issued at the VAT point, it should include,in addition to the invoice date, a reference to the VAT point date.

Invoices thatare booked before the fifteenth day of the next month, but that have a referenceto the previous VAT settlement, should not interrupt the sequential posting.Invoices with VAT point date in the previous month but invoice date in thecurrent month should be booked in a chronological sequence with the invoices inthe current month  with a reference tothe fact that these invoices are related to the previous VAT settlement.

Companiesthat issue the sales invoice on the same day, without applying the change thatis introduced by L.D.119/2018, will remain compliant.

Overview


This hotfixis delivered to support the changes introduced by the L.D.119/2018 on Microsoft Dynamics 365 for Finance andOperations starting from version 10.0.6

For Dynamics365 for Finance and Operations version 7.3 download and install the hotfix KB #4511201 by the link at the end of thecurrent article in Hotfix information section.

Theregulatory feature introduces a new date-type field for VAT transactions – Dateof VAT register. The additional date will serve as a VAT pointdetermination criterion for including VAT transactions in the scope of the salestax settlement period and, effectively, in VAT returns reporting.

Implementation details


“Date of VAT register”activating

The Dateof VAT register field is shared globally and can be enabled in legal entitieswith primary address in any country. To switch on this functionality in Finance and Operations version 10.0.6 and later “Dateof VAT register” feature must be enabled in the Feature managementworkspace:

image.png

Toswitch on “Date of VAT register” functionality in Finance and Operations version 7.3: 

  1. Open System Configuration > License configuration page
  2. Enable maintenance mode
  3. iisreset
  4. Enable General Ledger > Sales tax > Transaction date for VAT register period > Date of VAT register configuration key
  5. Disable maintenance mode

image.png

When “Dateof VAT register” feature is enabled in the Feature management workspace or as a configuration key (for the version 7.3), usercan define additionally for sales tax transactions date of tax point by using “Dateof VAT register” field in all legal entities through the system.

Date ofVAT register” field appears on more than 20 pages. These pages includejournals, sales orders, purchase orders, free-text invoices, vendor invoicejournals, and project invoices. When you update or post the documents, alltaxes are posted by using the corresponding date of the VAT register, and thedate is included on pages such as the customer and vendor invoice journalspages.

Note, that systemdoesn’t allow to post an invoice with value of “Date of VAT register” fieldin a closed interval of sales tax settlement period.

Date ofVAT register” field appears also in the following reports:

  • Tax >Inquiries and reports > Sales tax reports > Specification
  • Tax >Inquiries and reports > Sales tax reports > Sales tax transactions
  • Tax >Inquiries and reports > Sales tax reports > Sales tax transactions –details
  • Tax >Inquiries and reports > Sales tax reports > Sales tax specification byledger transaction

Auto-filling of “Date ofVAT register” value

 “Date of VAT register” feature enables possibilityto select a method of auto-filling of “Date of VAT register” field via the Date of VAT register filling parameter onthe Sales tax groups page:

image.png

This option fills in automatically “Date of VATregister” field during invoice creation. The following methods are available to select:

  • Manually – no valuewill be defined for Date of VAT register field. User can manually definethe value before invoice posting.
  • Document date – value ofDate of VAT register field will be defined automatically on documentdate change.
  • Posting date - value ofDate of VAT register field will be defined automatically on posting datechange.
  • Last delivery date - thedate of last packing slip (for sales order) or product receipt (for purchaseorder) will be populated as Date of VAT register of the invoice.

“Date of VAT register”filling after invoice posting

If for somereason an invoice is posted with empty “Date of VAT register” field, itis still possible to fill it in. To do so, open Tax > Periodictasks > VAT register transactions page. This page represents salestax transactions with empty “Date of VAT register” field. You may selectone record for update or a set of records by using a Filter function. To definethe value for Date of VAT register field of the select record, click “Dateof VAT register” button on the Action pane of the page and specify the valuein the “Date of VAT register” field of the dialog. Updated record willbe automatically filtered out from the list of records on the VAT registertransactions page.

Systemdoesn’t allow to update “Date of VAT register” field with a value in aclosed interval of sales tax settlement period.

 “Date of VAT register” impact on VAT settlementand reporting

When “Date of VAT register”feature is enabled in the Feature management workspace, user in legalentity with primary address in Italy will be able to activate “Dateof VAT register” parameter on General ledger parameters page:

image.png

When this parameter is switchedon, “Settle and post sales tax” process and “Italian sales taxpayment report” will consider sales tax transactions by “Date of VATregister” instead of date of transaction posting.

Note, that system will notallow:

  • to switch On “Date of VAT register”parameter on General ledger parameters page if there are taxtransactions posted in open interval of sales taxsettlement period with value of “Date of VAT register” field in a closedinterval of sales tax settlement period.
  • to switch Off “Date of VAT register”parameter on General ledger parameters page if there are taxtransactions with value of “Date of VAT register”field in a closed interval of sales tax settlement period but postedin open interval of sales tax settlement period.
  • to switch Off “Date of VATregister” feature in Feature management workspace if there is atleast one legal entity where Date of VAT register” parameter onGeneral ledger parameters page is switched on.

“Sales tax transactionsextension” consistency check

Date of VAT register” field is physically stored in a TaxTrans_Wtable which an extension of TaxTrans table. When a company switches on "Date of VAT register” parameter on General ledger parameters page, data source queries onsome pages in the system starts working differently, joining the TaxTrans_Wtable. It is possible that user will not be able to see tax transactions postedin the past period. It is because there are no corresponding transactions in TaxTrans_Wtable because it was not used in the past.

To avoid this issue, we recommend running “Sales tax transactionsextension” consistency check. Open System administration > Periodicaltasks > Database > Consistency check page and mark Program> General ledger > Sales tax > Sales tax transactionsextension check box (you don’t need to mark the parent checkboxes if you wantto run only Sales tax transactions extension check):

image.png

Run “Sales tax transactions extension” consistency check with:

  • Check” option to find out if there are missing transactions in TaxTrans_W table in your system. As a result, systemwill inform you about how many transactions in TaxTrans table miss correspondingrecords in TaxTrans_W table.
  • Fix” option if you want to compensate missing records in TaxTrans_Wtable. As a result, system will insert corresponding records to the TaxTrans_Wtable and Posted sales tax transaction in the past periods will be seen again everywherein the system. 

Make sure that you have chosen the right date in "From date" on the dialogue . Leave "From date" field blank if you want to recover all the tax transactions in the system.

Sales tax transactions extension” consistency check is availablewhen Date of VAT register” featureis enabled in Feature management workspace.

"Sales tax transactions extension" consistency check is available in build version starting from 10.0.234.21 for 10.0.6 version of the application and any version starting from 10.0.7.

Changes in the Italian salestax payment report

You may run “Italian salestax payment report” by using the following menu items:

  • Tax > Declarations> Sales tax > Sales tax (Italy)
  • Tax > Declarations> Sales tax > Report sales tax for settlement period
  • Tax > Inquiresand reports > Sales tax payments, Sales tax (Italy) button
  • Tax > Inquiresand reports > Sales tax payments, Print report button (whenItalian report layout is defined for the Sales tax authority specified forthe Sales tax settlement period of the selected Sales tax payment line)

Date of VAT register” parameter on General ledger parameterspage doesn’t impact on list of invoices represented on Sales tax book section(s)page(s), all the invoices posted in the related Sales tax book sections duringthe selected period will be included into the report. Nevertheless, resulting amountsof VAT will be calculated depending on “Date of VAT register” parameter onGeneral ledger parameters page:

  • when “Date of VAT register” parameteron General ledger parameters page is switched On – by “Date of VATregister” of tax transactions in the period.
  • when “Date of VAT register” parameteron General ledger parameters page is switched Off – by posting date oftax transactions in the period.

When “Date of VAT register” parameter on General ledgerparameters page is switched On, “Italian sales tax payment report”will additionally provide the following information:

1.       Pagesof sales tax books sections: new “Date of VAT point (Date of VAT register)” (inItalian: “Momento di effettuazione dell’operazione”) column – represents thevalue of “Date of VAT register” of tax transaction.

2.       Totalsby each sales tax book section is represented in three groups:

  • Operations in the actual period withcompetence date in the actual period
  • Operations in the actual period withcompetence date in the previous period
  • Operations in the next period withcompetence date in the actual period

3.       Totalsby sales and purchase books are represented in three lines:

  • Total operations in the actual period withcompetence date in the actual period
  • Total operations in the actual period withcompetence date in the previous period
  • Total operations in the next period withcompetence date in the actual period

4.       Summarysection which represent total VAT amounts by sales tax books sections groupedby sales tax book sections, is represented separately in three parts:

  • Operations in the actual period withcompetence date in the actual period
  • Operations in the actual period withcompetence date in the previous period
  • Operations in the next period withcompetence date in the actual period

5.       Totals section on summary section which represents total VAT amounts by sales tax bookssections grouped by sales tax book sections, is represented separately in threelines:

  • Total operations in the actual period withcompetence date in the actual period
  • Total operations in the actual period withcompetence date in the previous period
  • Total operations in the next period withcompetence date in the actual period

Additionally, “Totalcalculated considering competence date” amount is provided in a separate line of totalson summary section which represents total VAT amounts by sales tax bookssections grouped by sales tax book sections.

Hotfix information


How to obtain the Microsoft Dynamics AX updates files

This update is available for manual download and installation from the Microsoft Download Center for version 7.3:

Prerequisites

You must have one of the following products installed to apply this hotfix:

  • Microsoft Dynamics 365 for Finance and Operations (7.3)

Restart requirement

You must restart the Application Object Server (AOS) service after you apply the hotfix.

More information


You can contact technical support for Microsoft Dynamics by phone using these links for country specific phone numbers. To do this, visit one of the following Microsoft websites:
 
Partners
 
Customers
 
In special cases, charges that are ordinarily incurred for support calls may be canceled if a Technical Support Professional for Microsoft Dynamics and related products determines that a specific update will resolve your problem. The usual support costs will apply to any additional support questions and issues that do not qualify for the specific update in question.