Exact Globe

Product Update 397: Reporting Consolidated Value Added Tax (VAT) Returns Electronically (German Legislation)

Introduction

In Germany, value added tax (VAT) returns have been reported electronically since 2006. These electronic VAT returns are known as ELSTER (ELektronische STeuerERklaerung) and are based on the XML file format. Validation and authentication of the XML files are handled by a COALA Java library, which is provided by the tax authority. However, customers need to use both Exact Globe and Exact Synergy in an integrated environment to generate and submit VAT returns electronically.

It is also common practice for German customers to have multiple Exact Globe administrations for one company, where each administration represents a department. Therefore, the VAT return needs to be consolidated by the parent administration as all the child administrations share the same fiscal code (tax number).

With this enhancement, it is now possible to report consolidated VAT returns electronically solely in Exact Globe.

Menu path

System/General/Settings/Federal state tax
Finance/VAT/Statistics/VAT return

What has been changed

The following prerequisites must be taken into consideration:

This change is only applicable to the German legislation.
This functionality is not applicable to payroll tax.
This functionality is also not applicable to a multiple tax environment. Therefore, Use tax module in General ledger settings is disabled.
To consolidate VAT returns for multiple administrations, the fiscal code must be the same for all administrations.
The link between multiple administrations is only one level, which is one parent and multiple child administrations.
You will need to ensure that digital certificates for authenticating the XML file are available on your computer.
The COALA library components and Java run-time needs to be installed in your computer for successful automatic validation, authentication, and submission of electronic VAT returns.

The following changes have been implemented:

Additions to Federal state tax office settings

A Consolidate: VAT return section is added to the Federal state tax office settings to provide a platform to define the parent and child administrations. Before any relationships are linked, this section will be available to all administrations.

An Elster section is also added to the Federal state tax office settings to generate digital certificates for authenticating XML files. This is only available for parent administrations.

Note: You need to have the administrator role to enable the Fiscal code, Consolidate: VAT return, and Elster sections.

The parent administration will need to define the Consolidate: VAT return section by clicking Companies to go to the Companies screen. Companies will be enabled when Fiscal code under the Fiscal code section is defined and you have the administrator role.

Adding child administrations

When you click Add in the Companies screen to browse for child administrations, the following screen will be displayed:

At Server, you can type or select the respective server. This is mandatory and by default it is empty. The server name defined here determines the company that can be selected at Company. At Company, you can type or select the relevant company based on the available administrations in the selected server. This is mandatory and by default it is empty. If you do not define Server and Company, the message “May not be blank” will be displayed. The message “Couldn’t connect to server” will be displayed if the system cannot connect to the server.

When you click OK, the system will first validate the connection to the selected administration. If it cannot find the company, the message “Can’t find: Company” will be displayed. Once the connection is validated, the system will validate the selected company before creating the relationship based on the following conditions:

1. You must have administrator rights in the selected company. If not, the message “Logon failed” will be displayed
2. The selected company cannot be the same as the current administration. If it is, the message “Not allowed” will be displayed.
3. The selected company cannot be linked to other parent administrations. If it is, the message “Not allowed: Already linked – Parent” will be displayed.
4. The selected company cannot be a parent administration. That means it must not have any child administrations linked. If it is, the message “Not allowed: Already linked – Children” will be displayed.
5. The fiscal code of the selected company must be the same as your company. If not, the message “Invalid: Fiscal code” will be displayed.

After the relationships are defined, the number of child administrations will be reflected at Number of companies: in the Federal state tax office settings of the parent administration.

In the child administration, the linked parent company will be displayed under the Consolidate: VAT return section as shown below. The function to select companies will be removed, as it is not possible for the child administration to define other child administrations. Fiscal code under the Fiscal code section in the Federal state tax office settings will be disabled so that you do not change the tax number, which is the key link to the parent administration. Once the parent administration removes the child administration, this screen will revert back to the original.

Changing the fiscal code

If the parent administration changes the tax number in Fiscal code under the Fiscal code section in the Federal state tax office settings, the system will validate if there are any linked relationships before allowing the change. Validation will take place when you click Save. If there are existing final processed VAT returns (either final return or correction), where the electronic XML file has not been sent to the tax authority, the following message will be displayed:

You can click Yes to proceed with the update or No to cancel the action.

If the parent administration is linked to child administrations, the following message will be displayed:

You can click Yes to proceed with the update or No to cancel the action.

Deleting child administrations

You can click Remove in the Companies screen to delete a child administration. To delete multiple child administrations, press down on the CTRL key while selecting the administrations. If the child administration has processed VAT returns which have not been submitted, the following message will be displayed:

You can click Yes to remove the relationship or No to cancel the action.

Note: If multiple administrations were selected, the message will list the company code and name accordingly. Following the removal of the relationship, the child administration will be able to do its own VAT return submissions electronically.

Generating digital certificates for authenticating XML files

When you click Generate at Digital certificate under the Elster section at the Federal state tax office settings, the following screen will be displayed. Generate will be enabled if you have the administrator role.

You can type the contact person’s name, e-mail and organization name at First name, E-mail, and Organization respectively. You can then click Generate to generate the digital certificate necessary for validation of XML files. For successful validation and submission of the electronic VAT return, Java and COALA must be installed.

Additional identification number for tax creditor

You need to type an additional identification number at Code at supplier for tax creditors before making electronic VAT returns.

Additions to VAT return screen

In the VAT return screen, when Elster is selected at Type under the Type section, the Print preview button is renamed Elster. A Send button is also added for you to generate and send the electronic VAT returns. However, the Send button is only available for parent administrations. When Trial or Final is selected at Type under the Type section, the Print preview button is renamed to Preview.

Note: Each administration is responsible to process their respective final VAT returns by clicking Elster. However, only the parent administration will generate the electronic VAT return, which consolidates all VAT returns for the linked administrations into one XML file. This is because the Send button is only available for parent administrations. It is therefore possible to submit the VAT return, even if any of the linked administrations have not processed their final VAT returns.

Generate and send ELSTER reports – To be sent tab

When you click Send in the VAT return screen, the following screen is displayed (To be sent tab):

This screen displays the processed final VAT returns for the parent and child administrations up to the respective month/quarter in the selected year. Depending on your selection under the VAT layout section in the VAT return screen, Month or Quarter will be displayed under the Return period section with the respective selections. You can generate the electronic VAT return for final return, correction, or both depending on the check boxes selected at Type under the Return period section. When you click Process, the XML file will be generated per record type, per return period. The message “Records processed.” will be displayed upon the successful completion. However, if not all final VAT returns of linked administrations have been processed for a selected period, the following message will be displayed:

Historical view of sent ELSTER reports – Sent tab

When you click Send in the VAT return screen, the following screen is displayed (Sent tab):

This screen displays electronic VAT returns which have been generated and sent to the tax authority. You can filter the records displayed according to Year, Month and Type under the Filter section. When you select a record and click Display, the XML file will be displayed as below.