Who is My Legal Customer for VAT purposes?

How to identify your legal partner for VAT purposes in the sales transaction

Every sales order in SAP contains four (or more) partner-functions. If left to it's own devices, standard SAP may identify the wrong partner as your legal customer for VAT purposes. This can lead to non-compliance and often goes silently unnoticed until your VAT inspector raises an assessment including penalties.

Exempting a transaction from VAT due to an Intra Community Dispatch

Consider an example where a Belgian sales organisation delivers the goods to a company in the Netherlands. This sales flow can be exempted from VAT as an Intra-EU dispatch from BE to NL only if:

  • The BE sales company can prove the goods have moved from BE to NL
  • A valid VAT registration number is used for the correct legal partner for VAT purposes

SAP partner functions

SAP identifies who your customer is via Partner roles. Within a sales order a minimum four partner roles are defined:

  • Ship-to partner role
  • Sold-to partner role
  • Payer partner role
  • Bill-to partner role
We need to teach SAP which partner role represents the legal partner for VAT purposes.

Download the Guide : Who is My Legal Customer for VAT Purposes?

In this Guide we explain the importance of the legal partner for VAT purposes in the sales transaction and how you can ensure you SAP system selects the correct legal partner. We explain: 1. How to identify the correct Legal Partner, 2. Determining different partner roles, 3. Standard SAP behaviour and 4. How to customise the legal partner in SAP.

Download the Guide