Reverse Charge Taxes for Intercompany AP Vouchers

You can apply a reverse charge tax to intercompany AP vouchers.

A reverse charge tax may be necessary when the following apply:

• A company that owns a project is charged for a project expense by another company (the supplying company).
• The company that owns the project is in a tax jurisdiction that requires the company to pay a tax on behalf of the supplying company. The supplying company, however, might not be registered in the same tax jurisdiction.

Deltek recommends that you consult your tax advisor for the particular situations in which you may need to apply a reverse charge tax to an intercompany AP voucher.

Setting up a Reverse Charge Tax Code to Use for Intercompany AP Vouchers

When you set up reverse charge taxes for intercompany AP vouchers on the Subledger Terms tab in Settings > Accounting > Intercompany Billing in the desktop application, the following apply:

• You must leave any Tax Code field in the Invoice section blank if it corresponds with an AP voucher reverse charge tax code that you enter in the Tax Code fields in the Voucher section on this tab. A "corresponding" tax code means a field in the same position in both sections. If, for example, you enter a reverse charge tax code in the second Tax Code field in the Voucher section, you must leave the second Tax Code field in the Invoice section blank.
• In the Tax Code fields in the Voucher section on this tab, enter up to three reverse charge taxes for intercompany AP vouchers. After you enter these taxes in the Voucher section, the Tax Code fields in the Invoice section that correspond with the AP voucher reverse charge taxes are disabled.

On the Options tab in Settings > Cash Management > Tax Codes, for a reverse charge tax:

• You must enter a debit account and project to explicitly indicate the debit entry.
• You can also enter a credit account and project to explicitly indicate the credit entry. If you do not enter a credit account and project, the credit for the intercompany AP voucher will be applied to the account that is entered in the Inputs section on the Options tab in Tax Codes Settings and applied to the organization that is associated with the project that incurred the expense.

Using the Reverse Charge Tax Code on an Intercompany AP Voucher

When you use a reverse charge tax code on an intercompany AP Voucher, the following apply:

• An intercompany transaction is not created for the tax amount. No accounting entry is made to the Intercompany accounts receivable or Intercompany accounts payable accounts.
• The tax amount on the intercompany AP voucher is "reverse charged" to the owner of the AP voucher (the company who owns the project).