Italian sales tax books

The topic describes how to set up and use Italian sales tax books and Italian sales tax book sections.

According to Italian fiscal legislation, every value-added tax (VAT) transaction must belong to a tax book (Libro IVA) that will be used for tax reporting. To fulfill these legislative requirements, Microsoft Dynamics 365 for Finance and Operations, Enterprise edition implements Italian sales tax books. Sales tax books can be of different types. You must specify the sales tax book type to help guarantee that all sales and purchase transactions are included on the Italian sales tax payment report. You can keep as many sales tax books of the Sales and Purchase types as you require. Every tax book can be divided into multiple tax book sections (Sezionale IVA). All sales tax transactions must be sequentially numbered (without gaps) and ordered by posting date. A tax book section is equivalent to a number sequence for the Italian sales tax voucher number (Protocollo IVA) that must always be applied during posting to help guarantee chronological order by posting date.

Prerequisites

The following table shows the prerequisites that must be in place before you start.

Category Prerequisite
Setup: Legal entity The primary address of the legal entity must be in Italy. (Click Organization administration > Organizations > Legal entities > Addresses > Country/region.)
Setup: Number sequences Set up as many number sequences as you require to cover all the required types of sales tax transactions. (Click Organization administration > Number sequences > Number sequences.) All these number sequences must be continuous and must have Company scope.
Setup: Journal names Set up the required journal names. (Click General Ledger > Journal setup > Journal names or Project management and accounting > Setup > Journals > Journal names.) On the General FastTab, in the Sales tax section, in the Italian sales tax book field, specify one of the following values:
  • Not included – Select this value for invoices and credit notes that come from countries/regions that are outside the European community.
  • Purchase – Select this value for purchase invoices and credit notes.
  • Sales – Select this value for sales invoices and credit notes.
  • Empty – Select this value for all other types of transactions.
In some cases, the Italian sales tax book field is set automatically, based on the Journal type value. For example, if the Journal type field is set to Invoice register, the Italian sales tax book field is set to Purchase by default.
Setup: Module parameters For vouchers to follow the number sequences of the related invoices and credit notes, you must select the Reuse numbers check box when you define the number sequences for those invoices and credit notes. You can find this check box on the Number sequences tab of the following pages:
  • Accounts receivable parameters
  • Accounts payable parameters
  • Project management and accounting parameters
For example, on the Accounts receivable parameters page, on the Number sequences tab, select the Reuse numbers check box for Free text invoice voucher to synchronize number allocation for free text invoice vouchers and free text invoices.

Set up sales tax books

Sales tax books are used for sales tax reporting. To set up Italian sales tax books, click Tax > Setup > Sales tax > Italian sales tax books. The following table describes the fields that are available on the Italian sales tax books page.

Field Description
Sales tax book Enter the ID of the sales tax book.
Name Enter a description of the sales tax book.
Sales tax book type Select the nature of the operations that will be performed through the sales tax book sections that you will attach to the sales tax book. The following values are available:
  • Purchase – Select this value for purchase invoices and credit notes.
  • Sales – Select this value for sales invoices and credit notes.
  • Not included – Select this value for invoices and credit notes that come from countries/regions that are outside the European community. This type is used only for statistical purposes and won't be included on the final fiscal tax book reports.
Settlement period Select an existing sales tax settlement period. When a sales tax book is printed, if the Update check box is selected on the Sales tax payment page, the date in the From date field is compared to the selected settlement period. The settlement period is also used to identify which sales tax books and sales tax book sections must be closed when a sales tax settlement is updated for a settlement period.
Closed to The latest closing date from the related sales tax book sections that belong to the selected sales tax book.
EU sales Select a sales tax book of the Sales type, and attach it to the current sales tax book of the Purchase type. This field is used if the selected sales tax book must include European Union (EU) purchase transactions from the current book on sales tax reports. This field is unavailable for sales tax books of the Sales and Not included types.
ATECOFIN Code Select the tax code for reporting.
Print summary and payment Select this option to print the summary and payment report. This field is available only for sales tax books of the Sales type.

Set up sales tax book sections

Sales tax book sections are a repository where ledger transactions are posted according to their nature. The voucher numbering is driven by the sales tax book sections. To set up Italian sales tax book sections, click Tax > Setup > Sales tax > Italian sales tax book sections. The following table describes the fields that are available on the Italian sales tax book sections page.

Field Description
Sales tax book Select one of the existing sales tax books that the sales tax book section is attached to.
Sales tax book section Enter the ID of sales tax book section.
Name Enter a description of the sales tax book section.
Number sequence code Select the number sequence code for the sales tax book section. The number sequence code that you select depends on the type of sales tax book that the sales tax book section is attached to:
  • For a sales tax book of the Purchase type: Select number sequence codes that are defined for purchase invoice vouchers or purchase credit note vouchers on the Accounts payable parameters page, or number sequence codes that are used on the Journal names page for vouchers that have the Italian sales tax book field set to Purchase.
  • For a sales tax book of the Sales type: Select number sequence codes that are defined for sales invoice vouchers or sales credit note vouchers or free text invoice vouchers or free text credit note vouchers on the Accounts receivable parameters page, or number sequence codes that are used on the Journal names page for vouchers that have the Italian sales tax book field set to Sales.
  • For a sales tax book of the Not included type: Select any suitable number sequence code.
Closed to Enter the end date of the last closed sales tax settlement period. This field is used to filter data on the sales tax report.
Close Italian sales tax book section The closing date of the Italian sales tax book for a tax period. You can't post or reverse an invoice that has a date that is earlier than the closing date of the tax period. This field is updated with the closing date of the tax period. The Update check box must also be selected on the Sales tax payment page.

The following button is also available.

Button Description
Create Automatically create all the required sales tax book sections for existing sales tax books of the Sales and Purchase types. Sales tax book sections are created for every number sequence that is defined for purchase invoice vouchers or purchase credit note vouchers or sales invoice vouchers or sales credit note vouchers or free text invoice vouchers or free text credit note vouchers on the Accounts payable parameters, Accounts receivable parameters, or Project management and accounting parameters page, and for every number sequence that is used on the Journal names page for vouchers that have the Italian sales tax book field set to Purchase or Sales. Every sales tax book section that is created is automatically attached to the default sales tax book. (The sales tax book must be created before the sales tax book sections.) If several sales tax books of the same sales tax book type (Sales or Purchase) exist, the first sales tax book is used by default. However, you can manually change this attachment. If no sales tax book exists, no sales tax book sections are automatically created.

Sales tax book status

When a new sales tax period is created, sales tax book lines are automatically set up for every sales tax book that exists. If an additional sales tax book is created, lines can be manually created for existing periods that haven't been closed. Click Tax > Indirect taxes > Sales tax > Sales tax settlement periods, and then click Sales tax book status. The following table describes the tabs on the Sales tax book status page.

Tab Description
Overview View the page status of the sales tax books. All the fields are locked for manual updates.
General View the same information that appears on the Overview tab, but only for the selected sales tax book.

The following table describes the fields that are available.

Field Description
Sales tax book Select the sales tax book ID that you set up on the Italian sales tax books page.
Name Enter the name of the tax book.
First page number The first page number that will be used on the final sales tax report for this sales tax period.
Changed to The page number that is specified in the Change first page number dialog box.
Last page number The last page number that will be used on the final sales tax report for this sales tax period.
Settlement period The settlement period that is used in the sales tax book.
From date The start date for the settlement period.
To date The end date for the settlement period.

The following button is also available.

Button Description
Change first page number Open the Change first page number dialog box, where you can change the first page number that will be used for the current open settlement period.

Change first page number dialog box

Use the Change first page number dialog box to change the number of the first page on the final sales tax report for this sales tax settlement period. The page number then appears in the Changed to column on the Sales tax book status page and is used as the first page number of the final sales tax report that is printed for the current tax period. The following table describes the fields that are available in the Change first page number dialog box.

Field Description
First page number The current first page number for the selected sales tax book.
Changed to Enter the new first page number to use on the final sales tax report.

Using sales tax books

When the setup is completed, the sales tax book sections appear on the Number sequences tab of the following pages:

  • Accounts receivable parameters
  • Accounts payable parameters
  • Project management and accounting parameters

Voucher numbers that are assigned during posting must be sequentially ordered by posting date, and the sales tax transactions that use the same number sequence code must be posted in order. If the voucher numbers aren't sequentially ordered, the user receives an error message. In addition, posting is interrupted if a sales tax transaction isn't assigned to any sales tax book section when the user updates an invoice. Whenever a voucher is posted through a sales tax book section, the identifiers of the related sales tax book and sales tax book section are saved in the tax transactions. (Click Tax > Sales tax inquiries > Posted sales tax, and then click the Posting tab.) This data can then be used during further sales tax reporting. Italian sales tax books are used for filtering, grouping, and sorting on the report that is accessed at Tax > Declarations > Sales tax > Sales Tax (Italy).