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VAT Rate Changes in Microsoft Dynamics

Managing VAT Rate Changes in Microsoft Dynamics 365 Business Central and Dynamics NAV

How does Business Central help with or manage VAT rate changes. Following the Summer Statement introducing a special VAT rate for the hospitality industry, and countries such as Germany reducing VAT rates, it is important to make sure that you are managing these rates on your systems. Business Central has comprehensive tools to make sure that you can manage this, but you must use it correctly.

With August here and the new VAT rates for specific markets being changed, it is an important time to address how companies using Business Central can manage this. There are two main ways:

  1. Change the rate on the VAT posting setup
  2. VAT rate change setup tool

Here we will look at the options, why you would choose them and how you would manage it.

VAT Posting Setup Rate

If you are dealing solely in the industries effected, or you have a small number of transactions, the simplest way to manage the VAT rate changes is to change the rate on that in the VAT Posting Setup. This would avoid changing the VAT Posting Group on items and G/L codes.

It must be noted that care must be taken close to the change-over dates. All possible Sales and Purchase orders & invoices and G/L journals involving VAT should be posted by the cut-off, and any remaining orders refreshed to the new rates to avoid “Full VAT” credits or invoices to correct them.  It would be worth creating an additional setup for “old standard” for any exceptions.

Note that any new combinations created in VAT Posting Setup should be reflected in new lines within the VAT Statement, and that Business Central does not allow the same VAT Identifier with a different VAT % in a single VAT Business Posting Group.

New Accounts for Posting Groups

If you have a more complex requirement, such as a large number of open documents or you need separate G/L Accounts, a more complex requirements. For this, Microsoft have provided a comprehensive rate change tool which can be found by searching for “VAT rate Change Setup” in Business Central:

Business Central Vat Rate Change Setup

In Dynamics NAV, this can be found under Financial Management/Setup/Vat Rate Change:

NAV VAT rate change

For an in-depth guide to using the Vat Rate Change too, check out the guide from Microsoft.

Vat Rate Change Setup Guide


Need more help or advice on VAT setup?

If you need more help or want some training on VAT setup, our team of experts are here to help. We have a number of accountants on our team, and we have over 300 years of collective experience of Microsoft Dynamics NAV and Dynamics 365 Business Central.

Contact the Experts

Francis Bray

An experienced accountant and financial director, he has over 16 years of NAV support. Discussing subjects such as financial legislation and the workings of finance in NAV and Business Central.

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