VAT compliance check
Kofax AP Agility provides a VAT registration number compliance check to satisfy EU legal requirements. This applies to invoices that charge value added tax only.
This requirement states that, if VAT is charged on a document, the vendor must quote not only their own VAT registration number (the vendor VAT registration number), but also the VAT registration number of the invoiced party (the bill-to VAT registration number).
Both VAT registration numbers must be valid for the same country, and this is why VAT is generally most prevalent on domestic invoices.
If the VAT compliance check is activated, Kofax AP Agility sends a document to the Validation activity if all of the following are true.
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Tax is charged on the document.
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Both the vendor and the invoiced company are based in an EU member state country.
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One or both of the VAT registration numbers are not present on the document, are not captured automatically, or do not share the same country prefix. Kofax AP Agility can be configured to require the VAT registration number of the vendor only.
Also, if VAT is charged, the currency of the invoice must be the local currency of the country whose VAT rates are applied. For example, if a German vendor issues an invoice charging UK VAT, then the invoice currency must be UK pounds sterling (GBP). If the invoice is issued in the German currency of Euros/EUR, then the invoice must quote either of the following:
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The UK pounds sterling equivalent of the VAT amount, such as the local VAT amount.
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The exchange rate at the time of invoice issue, between UK pounds sterling and Euros.
Kofax AP Agility detects these and requires the user to enter either a local VAT amount or an exchange rate if no value is captured automatically. This check is carried out when a pair of valid VAT registration numbers are found. The currency of the company code is used as the currency in which either the invoice or the local VAT is quoted.
If VAT Based Tax Processing is enabled to capture the invoice tax amounts, it is also possible to extend the VAT compliance check. This is done to verify that the VAT rates captured within the table are valid for the country where VAT is applied, if the total invoice tax amount is greater than zero. The country where VAT is applied is derived firstly from the country code represented by the first two characters of an extracted vendor VAT registration number. If not available, the vendor country of origin is used.
The following topics provide more details about configuring VAT number compliance check.