How To Fix FS735 - Foreign customer is subject to tax according to code; check

SAP Error Message - Details

• Message type: E = Error

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

• Message number: 735

• Message text: Foreign customer is subject to tax according to code; check

Self-Explanatory Message

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Smart SAP Assistant

• What is the cause and solution for SAP error message FS735 - Foreign customer is subject to tax according to code; check ?

  The SAP error message FS735 indicates that a foreign customer is subject to tax according to a specific tax code, and it prompts the user to check the configuration or data related to that tax code. This error typically arises in the context of financial transactions involving foreign customers, particularly in the areas of accounts receivable and tax determination.
  Cause:
  
  
  Tax Code Configuration: The tax code assigned to the transaction may not be correctly configured for foreign customers. This could mean that the tax code is not set up to handle foreign transactions or that it is incorrectly assigned to the customer.
  
  
  Customer Master Data: The customer master record may not have the correct tax classification or may not be set up to handle foreign tax regulations.
  
  
  Country-Specific Tax Regulations: Different countries have different tax regulations, and the system may be trying to apply a tax code that is not applicable to the foreign customer based on their location.
  
  
  Transaction Type: The type of transaction being processed may not be compatible with the tax code assigned, leading to the error.
  
  
  Solution:
  
  
  Check Tax Code Configuration:
  
  Go to the transaction code OBYZ to review the tax code settings.
  Ensure that the tax code is configured to apply to foreign customers and that the relevant tax rates are set correctly.
  
  
  
  Review Customer Master Data:
  
  Use transaction code XD02 (or FD02 for financial data) to check the customer master record.
  Ensure that the tax classification is set correctly for foreign customers. This may involve setting the appropriate tax category or tax exemption status.
  
  
  
  Verify Country-Specific Settings:
  
  Check if there are any country-specific settings that need to be applied for the foreign customer. This may involve consulting with your tax department or reviewing local tax regulations.
  
  
  
  Adjust Transaction Type:
  
  Ensure that the transaction type being processed is appropriate for the tax code being used. If necessary, change the transaction type or the tax code to one that is compatible.
  
  
  
  Consult Documentation:
  
  Review SAP documentation or consult with your SAP support team for any specific configurations or updates that may be required for handling foreign customers and tax codes.
  
  
  
  Related Information:
  
  SAP Notes: Check for any relevant SAP Notes that may address this specific error or provide guidance on tax code configuration for foreign customers.
  Tax Compliance: Ensure that your organization is compliant with international tax regulations, as this can affect how transactions with foreign customers are processed.
  Testing: After making changes, conduct thorough testing to ensure that the error is resolved and that transactions are processed correctly.
  
  If the issue persists after following these steps, it may be beneficial to engage with your SAP support team or a consultant who specializes in SAP financial modules for further assistance.