Title Goes Here and Here and Here

PUBLIC

December 8

th

2020

Brexit Transition and Beyond

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Disclaimer

The information in this presentation is confidential and proprietary to SAP and may not be disclosed without the permission of SAP.

Except for your obligation to protect confidential information, this presentation is not subject to your license agreement or any other service

or subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this presentation or any related

document, or to develop or release any functionality mentioned therein.

This presentation, or any related document and SAP's strategy and possible future developments, products and or platforms directions and

functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information in this

presentation is not a commitment, promise or legal obligation to deliver any material, code or functionality. This presentation is provided

without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a

particular purpose, or non-infringement. This presentation is for informational purposes and may not be incorporated into a contract. SAP

assumes no responsibility for errors or omissions in this presentation, except if such damages were caused by SAP’s intentional or gross

negligence.

All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from

expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates,

and they should not be relied upon in making purchasing decisions.

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Introduction

Guidelines from Finance perspective

Guidelines from Sales perspective

Guidelines for GTS

Agenda

Introduction

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Intelligent

Technologies

BREXIT – Where are we?

Globalization

Services

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Intelligent

Technologies

BREXIT – Impact on Customs & International Trade

Globalization

Services

UK becomes a 3

rd

country.

Deactivate the EU-flag for GB in country table T005 at 24:00 CET

at the last day of the transition period

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Intelligent

Technologies

Where to go?

Look at the SAP ONE Support Launchpad

https://launchpad.support.sap.com/#/legalchangenotification

o See the list of upcoming legal changes

o Central SAP Note (2885225) across solutions and countries

o Further SAP Notes and Knowledge Based Articles will be published and referenced

within the central note.

BREXIT Latest Requirements

Globalization

Services

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Intelligent

Technologies

BREXIT Latest Requirements

Globalization

Services

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Intelligent

Technologies

BREXIT Central SAP Note 2885225

Globalization

Services

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Intelligent

Technologies

Setting a SAP Note as “Favourite”

Globalization

Services

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Intelligent

Technologies

BREXIT – Impact on VAT (1)

Globalization

Services

Key VAT considerations:

i. Import VAT

ii. EU VAT Simplifications no longer valid

iii. Northern Ireland (NI) Protocol

iv. Reporting and administrative requirements

k

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Intelligent

Technologies

BREXIT – Impact on VAT (2)

Globalization

Services

i. Import VAT

• UK Postponed Accounting for Import VAT

• Available for all UK VAT registered companies importing goods into UK from 01.01.21

• No payment of import VAT at the border

• VAT can be accounted for on the VAT return

• HMRC to provide downloadable online statements every month for the postponed import

VAT

• EU postponed import VAT accounting:

• Some EU countries operate postponed import VAT accounting, subject to meeting certain

conditions.

• Example: In Belgium a license “ET 14000” can be requested.

k

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Intelligent

Technologies

BREXIT – Impact on VAT (3)

Globalization

Services

ii. EU VAT Simplifications no longer valid

Simplifications such as:

• Triangulation

• Supply and install

• Distance selling

• Consignment and call-off stock

that are currently enjoyed by GB businesses will not apply in respect of GB VAT

registration numbers as from 1

st

of January 2021

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Intelligent

Technologies

BREXIT – Impact on VAT (4)

Globalization

Services

iii. Northern Ireland (NI) Protocol

• NI = dual status within the EU VAT, Customs Union and Single Market

• NI follows UK’s VAT system as well as EU’s VAT system

• NI continues to enforce the EU's customs rules and follow its rules on product

standards while the rest of the UK stops doing so

• Only valid for goods

• In place for 4 years as from 1

st

of January 2021

• For Northern Ireland new VAT identification numbers with prefix "XI" will

be required.

k

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Intelligent

Technologies

BREXIT – Impact on VAT (5)

Globalization

Services

iv. Reporting and administrative requirements

K

Are fiscal

representatives

needed?

How to validate

the

VAT-numbers

from NI

businesses

through the

VIES?

What happens

to

Intrastat?

What happens

to

ESL reporting?

…

Guidelines from Finance perspective

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Intelligent

Technologies

BREXIT – Central FI note 2768412

The intention of this note is to outline the direction of the solution as early

as possible. Several changes which are mentioned in the note and shown

in this presentation are still in development and not released yet.

This is indicated in the text ("planned", "there will be") and also marked with

an asterisk*. We will update this note regularly when the detailed notes get

released.

We recommend to

read the English

version to avoid delays

due to translation

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BREXIT – VAT enable EU related transactions after end of transition phase

After the end of the transition period new EU transactions with the UK (with the exception

of the Northern Ireland protocol) will not be possible anymore.

However, in many systems postings with EU related tax codes will have be recorded after

the end of transition period as subsequent changes of tax base amounts (e.g. discounts,

bonuses, price reductions, etc.) might occur even several months or even years after the

end of transition period (e.g. yearly bonus settlements). Another case are payments on

receivables which had previously been derecognized (e.g. insolvency cases).

Therefore, we have to enable that postings with EU related tax codes are still possible

even after the end of the transition period.

This also means that VAT identification numbers for UK (starting with GB) have to remain

in the business partner/customer/vendor master data and company code master data for

the time being (at least until the last EU related tax code posting has been posted).

For Northern Ireland new VAT identification numbers with prefix "XI" will be introduced.

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BREXIT - enabling EU transactions after removing EU-Flag

The deactivation of EU-Flag for GB in country table T005 has some technical impact in FI:

In FI postings the EU relevant fields Reporting country, VAT registration number and EU

triangulation only appear in EU company codes.

Furthermore registration numbers in master data can only be entered for EU countries.

SAP notes 2766031, 2770937, 2785653 enable that for GB company codes EU VAT fields still

appear in posting transactions and GB VAT registration numbers can be maintained in master

data.

You may deactivate this special treatment by implementing a BADI (in some months/years).

We do NOT recommend to do this in 2020/2021.

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Intelligent

Technologies

BREXIT – postponed Accounting in the UK

Globalization

Services

In order to simplify customs procedures the UK has introduced an new

procedure “Postponed Accounting”.

For information about configuration see SAP note 2996657.

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Northern Ireland protocol – master data changes

• New parameter in additional data for company code (table T001Z) planned*

• New parameter/field for XI VAT number, stored separately from other VAT IDs*

• Business partner:

• Customer/vendor master:

If field Tax Number 6 is not available for entry after you have implemented the relevant note*, please adjust customizing:

IMG path: Financial Accounting (New) -> Accounts Receivable and Accounts Payable -> Customer Accounts/Vendor Accounts ->

Master Data -> Preparations for Creating Customer/Vendor Master Data -> Define Account Groups with Screen Layout

(Customers/Vendors): In General Data – Control: set radio button for „Tax Number 6“ at least to „optional entry“ for all relevant

account groups.

If the field still is not available for data entry please also check IMG activity: Define Screen Layout per Activity (Customers/Vendors).

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Northern Ireland protocol – posting

In FI Transaction the system does not have the information to decide automatically about the right VAT

Registration Number. We will enable all transactions in FI to allow the user to enter the VAT Registration

Number for XI.

After the code changes are implemented, in FI Transactions like FB01 you have following changes:

- No default for “Reporting Country” anymore if the customer has a region in Northern Ireland

- No default for the “VAT Registration Number” anymore if the customer is located in Northern Ireland

- If the customer is located in Northern Ireland, the user needs to decide and fill the “Reporting Country”

- If the user enters “XI”, then the VAT Registration number starting with XI* is derived and posted.

- If the user enters “GB”, then the VAT Registration number starting with GB* is derived and posted.

- In case of CPD customers: If you enter Country “GB”, the system will do the consistency checks for GB, but

allows to enter a VAT Registration Number starting with “XI”

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FI Transactions

- Some Examples

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Derivation Logic in the Accounting Interface

- Current logic of the accounting interface:

- In some cases a VAT registration number is derived in the accounting interface:

- 1. the VAT registration number is not filled by the sender

- 2. the document contains a customer item

- 3. the document is not from SD (GLVOR = ‘SD00’)

- After the code changes are implemented

- There is one more conditions for deriving a VAT Registration number in the accounting interface:

- The customer must not be located in Northern Ireland

So in some exceptional cases it might be required to enter VAT Registration number in postprocessing.

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Postings - postprocessing

- In cases when not VAT ID could be automatically determined the user can update the

right VAT Registration number after the document is posted with the document change transaction FB02

- For mass changes a new report RF_VAT_REGNO_UPDATE will be provided:

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EC Sales list programs: RFASLM00, RFASLD00 and RFASLD02

According to Article 264 of EU VAT Directive subsequent changes in tax

base amounts (e.g. payments with discount, bonuses, etc.) must be

reported in EU sales list. This means that "GB" records must be

reported in EU sales list even after the end of the transition period (likely

negative amounts).

But we observe a contradictory communication by tax authorities in

some countries that they do not want to have “GB” records in EU sales

list after the end of the transition period. SAP note 2778393 provides a

new select option for recapitulative statement so customers can remove

these records by setting the selection to unequal "GB*".

The derivation logic for the VAR registration number

changed for Northern Ireland protocol:

When you mark “Read VAT Reg. No from Master” the new parameter

“Read XI VAT No” becomes relevant: It controls if the XI* VAT Registration

number or the GB* VAT Registration number is used in the report

New Parameter “Display XI VAT No”

When you mark “Display XI VAT No”, then the XI* VAT Registration

Number from the Company Code Parameter “XIVATN” is used in the EC

Sales list header to identify the tax payer.

Example

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BREXIT – Withholding tax

As the Parent Subsidiary Directive and the Interest and Royalties Directive

will no longer be applicable after the end of the transition period some

transactions might become relevant for withholding tax.

Therefore, please check your transactions with UK companies (dividends

and interest or royalty payments for licenses in particular) in regards of

withholding tax.

The treatment in detail might differ for each country as double taxation

agreements between each country and the UK will become relevant.

Ask your business partners for exception certificates early and apply

exception certificates yourself if required.

Changes in withholding tax treatment will become effective after the end of

the transition period. Keep in mind that withholding tax in Europe is usually

due at payment so it might be necessary to add withholding tax data in

open items after 31.12.2020.

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Normal WTH rate,

e.g. UK 20%

Reduced WTH rate

according to

double taxation

agreement (e.g. 0%)

During the validity timeframe of the

exemption certificate the lower withholding

tax rate according to double taxation

agreement applies.

It might even be zero (e.g. double taxation

agreement Germany/UK) but you really

need to check the details here.

Normal WTH rate,

e.g. UK 20%

Withholding tax for licenses and excempt certificates

How exemption certificates influence withholding tax for licenses:

Guidelines from Sales perspective

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BREXIT – Taxes in Sales

Key considerations for Taxes in Sales

• Parameters of Taxes in Sales

• Tax amount determination k

Our Mission

Enable all Sales business processes to continue to run in a legally compliant manner:

• Locally - in the UK (region-based / Northern Ireland (NI) Protocol)

• Globally - between EU countries and the UK (region-based / Northern Ireland (NI) Protocol)

as well as between non-EU counties and the UK

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BREXIT – Solution Approach for Parameters of Taxes in Sales

Is GB tax

departure

country?

Is plant located

in NI?

Is GB tax

destination

country?

Is Ship-to-party

located in NI?

Is the service

rendered date

before or after

end of

transition

phase?

Is it a supply of

physical goods

or services?

What is the

correct VAT

registration

number?

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BREXIT – Solution Approach for Tax amount determination

• Identify Northern Ireland using region codes

• Distinguish between physical goods and services (services are not part of Northern Ireland Protocol)

• Classify Sales business process as relevant for domestic or export tax

• Identify Sales business process between EU and Northern Ireland as intra-community supply

(depending on region, time, VAT registration number and product type)

• Use condition technique of pricing solution:

o condition tables with region of plant and region of customer

o access sequences

o pricing requirement routines

o conditions records

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BREXIT – Suggested Preparations for Taxes in Sales

• Check SAP rollout activities (regularly updated), e.g. how-to guidance, implementation

notes etc.

• Populate region code in master data records of customers located in Northern Ireland

• Populate region code in data of plants located in Northern Ireland

• Keep GB VAT registration number and add new XI VAT registration number in customer

master data where needed

• Check of tax classification in material master record - different tax classifications are needed

for physical goods and services

• Creation of necessary pricing requirements, condition tables, access sequences and

condition records

Guidelines for GTS

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Brexit

o Changes prepared, done and delivered for the past No-Deal deadlines

o No substantial new changes, existing changes extended after the end of transition

period

o SAP GTS Central SAP Note (2912027)

Intelligent

Technologies

BREXIT and Northern Ireland Protocol

Globalization

Services

o New topic with new challenges

o If no plant in Northern Ireland it has limited impact in SAP GTS

o SAP GTS Central SAP Note (2998666)

Northern Ireland Protocol

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Intelligent

Technologies

Customs Declarations under NIP

Globalization

Services

o No Import or Export declaration required *

o Country code XI for Northern Ireland if relevant

Movements between EU and Northern Ireland

EU

RoW

* Licenses still required based on German customs

o Import or Export declaration with UK CHIEF or

o Import or Export declaration with UK CDS

Movements between Rest of the World and Northern Ireland

o Import declaration with UK CDS or

o Import declaration with UK TSS (temporary)

Movements from Great Britain to Northern Ireland

o Export declaration with UK CDS for limited scenarios (CPEI, CITES…)

Movements from Northern Ireland to Great Britain

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Introducing a new UK Tarif schema

With the EU-Exit UK is not going to use EU Tarif codes any longer. Therefore a new UK

Tariff system was introduced. From 01.01.2021 these tariff codes will start to differ.

o Existing classification may be copied to the new tariff schema as long as they are

identical

o Usage of reference schema to minimize classification efforts

o For Import declarations to Northern Ireland materials have to classified for both tariff

systems (UK & EU)

Intelligent

Technologies

EU Taric und UK Tariff

Globalization

Services

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Requirements for Intrastat reporting after the end of transition period under the Northern Ireland Protocol

o Goods movements between the EU and Northern Ireland must be reported in EU countries and the UK

o Imports into Great Britain from the EU must be reported in the UK

Intelligent

Technologies

Intrastat Reporting

Globalization

Services

Intrastat reporting in SAP GTS with feeder systems SAP S/4HANA and SAP ECC

o SAP S/4HANA: SAP Notes 2753338, 2874323, 2875339, and 2976216 must be implemented before 1

st

of Jan 2021

o SAP ECC: SAP Notes 2753338, 2874323, and 2976216 must be implemented before 1

st

of Jan 2021

o SAP GTS: SAP note 2997204 must be implemented before importing data from feeder systems for Jan 2021

Intrastat reporting in SAP S/4HANA

o SAP Notes 2753338, 2874323, 2875339, and 2976216 must be implemented before 1

st

of Jan 2021

o SAP Note 2997204 must be implemented before executing Intrastat selection reports for Jan 2021

Intrastat reporting in SAP ECC for AT, BE, CZ, DE, DK, ES, FI, FR, GB, GR, HU, IE, IT, LU, NL, PL, PT, SE, SK

o SAP Notes 2753338, 2874323, and 2976216 must be implemented before 1

st

of Jan 2021

o SAP Notes for reporting XI and XU codes will be provided as soon as authorities of respective EU countries publish the related

information. These SAP Notes must be implemented before creating Intrastat declaration files for Jan 2021.

Thank you.

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