Brexit Advice from SAP Business One
Following on from our previous blogs - which were originally released in March 2019 and subsequently updated in October 2019 - SAP have released further information as to the current state of play with regards to SAP Business One and Brexit.
We will be updating our customers as and when we get further information. In the meantime, may we direct your attention to the following site: https://www.gov.uk/transition in order to avail yourself of the latest guidelines for your business.
Also, the below, and any subsequent advice is subject to change at very short notice. We will be updating our blog with the latest details, so stay in touch.
SAP Business One update
SAP intends to provide a patch or patches to solve the problem described. The section References below lists the relevant patches once they become available, and the Related Info content of relevant patches available in the SAP Support Portal, show this SAP Note. Be aware that these references can only be set at patch release date. SAP delivers patches only for selected releases at its own discretion, based on the business impact and the complexity of the implementation.
Changes resulting from Brexit, with potential long-term impacts on SAP Business One, can be expected in the areas of tax, reporting, goods movement among many others. SAP recognizes these potential changes and is closely monitoring the situation and analyzing the impact for SAP Business One customers and partners, primarily those using the existing localization for the United Kingdom and Ireland.
The transition period
As of September 24, 2020, SAP Business One customers should consider the following points, in connection with existing functionality in SAP Business One 10.0 FP 2008, regarding transition-period scenarios which started on January 31, 2020, and expected to end on December 31, 2020:
- Transition period means that the UK follows all EU regulations including those for trade, tax, and customs. The same transition period applies to the EU-27 countries, which means that the UK is considered an EU member until December 31, 2020.
- Customers operating in the UK must continue to handle EU-27 country customers in the separate category of tax boxes or BAS codes under Making Tax Digital declarations, as was the case in 2019.
- Customers operating in the UK must continue to follow Intrastat and/or EU Sales report obligations if they were obliged to do so before January 31, 2020.
- SAP Business One customers must not deselect the EU setting for the UK (in the Countries window) in any localization or for any other EU-27 country before December 31, 2020.
Customers should review the Making Tax Digital SAP Note 2456346 (opens in new window - you will need a SAP ID account to read this information) for details about the recommended set-up of BAS codes and tax codes for all Brexit options, Withdrawal Agreement ratification and no-deal scenario after the end of the transition period.
After the end of the transition period (customers based in the UK)
A new localization is available for the United Kingdom of Great Britain of Northern Ireland (UK) in SAP Business One version 10.0 FP 2008. The new localization is available in preparation for the UK’s departure from the EU after the end of the transition period. The existing localization United Kingdom and Ireland is renamed to UK International / Republic of Ireland (GB). Initially, UK customers can choose to create a new company database on the new and existing localizations. A new localization can be used even before the end of the transition period.
The new Localization Migration Utility provides customers in the UK with a convenient way to migrate company databases from the current GB localization to the new UK localization in order to be ready for future legal changes. The migration process is an SAP Business One code procedure that is easy to execute and normally takes a few minutes. The tool is released with SAP Business One 10.0 FP 2008 and will also be still available in version 10.0 FP 2105. However, it will be deactivated in version 10.0 FP 2108 and higher.
The following points related to SAP Business One that will become effective after the end of the transition period for the customers in the UK:
- The EU Sales report will become obsolete after December 31, 2020.
- Intrastat declarations will become obsolete after December 31, 2020.
- EU transactions will need to be considered as import/export transactions.
- VAT returns will most likely require imports/exports to be reported in the same manner as EU transactions before the end of the UK transition period. The final guidance on VAT returns after December 31, 2020 from the HRMC is yet to be disclosed.
- For VAT reports that include dates before and after the end of the UK transition period, we recommend that you set up new VAT codes for imports/exports to be used in transactions after December 31, 2020. The VAT tax declaration boxes (and, where applicable, BAS code definitions, such as in MTD protocols) will need to incorporate the new VAT codes.
- To correctly handle transactions with other EU countries after the end of the UK transition period, the correct tax codes need to be set up in the business partner master data and used on invoices. This is to ensure that exports from the UK to EU countries are no longer treated and reported as EU cross-border goods deliveries but instead as trade with countries outside of the EU (like for the United States).
- You may need to define duty groups to apply to items that are purchased in EU-27 countries (the remaining 27 EU member countries) to capture duties in landed costs transactions.
- If you have defined account determination based on VAT codes, you need to review and amend this definition where relevant.
- We recommend that you process a billing run for all open deliveries (especially for EU customers) on December 31, 2020, to avoid having to maintain correct VAT codes for future dated transactions.
After the end of the transition period (customers based in the EU-27)
Conceivably, all remaining 27 EU member countries will be affected by the situation after the end of the Brexit transition period. Any EU-27 organization that will be transacting with UK organizations will need to consider the effect on EC Sales reports and local VAT reporting requirements. Sales to the UK will no longer be relevant for the EC Sales report. All transactions with UK business partners will need to use a VAT code that applies to third party countries. These transactions may also include landed costs including customs duties.