EU Acquisition Tax

For item purchases from other EU countries, a given purchase tax is levied by the receiving country.

The tax is thus not paid to the vendor but is credited an account for EU acquisition tax. The amount is debited the usual account for ingoing tax. The tax settlement shows the EU acquisition tax account as sales tax and is reconciled against the tax deductible part of the purchase tax originating from the EU purchase. See also the section on Tax Settlement in the chapter on the General Ledger.