How To Fix FS205 - Tax code with non-deductible, distributable amount not permitted

SAP Error Message - Details

• Message type: E = Error

• Message class: FS - Messages from Tax Routines / Prenumbered Checks

• Message number: 205

• Message text: Tax code with non-deductible, distributable amount not permitted

What causes this issue?

You are entering a down payment or a down payment request using a tax
code for amounts that include a non-deductible, distributable portion.

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

Since down payments do not, as a rule, contain any expense or cost
items, it is not possible to distribute the non-deductible tax amount.

System Response

How to fix this error?

You must use a different tax code. If necessary, you must create a new
tax code containing the same percentages as the code you are trying to
use now but which prompts the system to create a separate line item for
the non-deductible tax amount.

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message FS205 - Tax code with non-deductible, distributable amount not permitted ?

  The SAP error message FS205 indicates that there is an issue with the tax code being used in a financial transaction. Specifically, it means that the tax code is associated with a non-deductible tax amount, and the system does not allow this tax code to be used in a context where a distributable amount is expected.
  Cause:
  
  Tax Code Configuration: The tax code in question is configured in such a way that it is marked as non-deductible. This means that the tax amount cannot be claimed back or deducted from the tax liability.
  Transaction Type: The transaction you are trying to process may require a tax code that allows for deductibility, but the one you are using does not meet this requirement.
  Account Assignment: The account assignment for the transaction may not be compatible with the tax code being used, leading to this error.
  
  Solution:
  
  
  Check Tax Code Configuration:
  
  Go to the transaction code OBYZ (or use the appropriate path in your SAP system) to review the configuration of the tax code.
  Ensure that the tax code is set up correctly for the type of transaction you are processing. If it is meant to be deductible, it should not be marked as non-deductible.
  
  
  
  Use a Different Tax Code:
  
  If the tax code is indeed non-deductible, consider using a different tax code that is appropriate for the transaction and allows for deductibility.
  
  
  
  Review Transaction Details:
  
  Check the details of the transaction you are trying to post. Ensure that all account assignments and tax codes are appropriate for the nature of the transaction.
  
  
  
  Consult with Finance Team:
  
  If you are unsure about which tax code to use or how to configure it, consult with your finance or tax team to ensure compliance with tax regulations and proper accounting practices.
  
  
  
  Testing:
  
  After making changes, test the transaction again to ensure that the error is resolved.
  
  
  
  Related Information:
  
  Tax Code Documentation: Review the documentation related to tax codes in your SAP system to understand the implications of using different codes.
  SAP Notes: Check for any relevant SAP Notes that may address this specific error or provide additional guidance on tax code configuration.
  User Training: Ensure that users involved in financial transactions are trained on the correct use of tax codes to prevent similar errors in the future.
  
  By following these steps, you should be able to resolve the FS205 error and ensure that your transactions are processed correctly.