What is reverse charge in SAP FI - Financial Accounting?

SAP Term: reverse charge

• Component: FI

• Component Name: Financial Accounting

• Description: A value-added tax VAT accounting mechanism, whereby the customer must account for VAT on the supplied goods.

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• Key Concepts: 
  Reverse charge is a mechanism used in the European Union (EU) to collect Value Added Tax (VAT) from customers. It is a way of collecting taxes from customers without the need for the seller to register for VAT in the customer’s country. The customer is responsible for paying the VAT to their local tax authority. 
  
  How to use it: 
  In SAP FI Financial Accounting, reverse charge is used when a company sells goods or services to another company in the EU. The seller will not charge VAT on the invoice, but instead will indicate that the customer is responsible for paying the VAT to their local tax authority. The customer will then pay the VAT directly to their local tax authority. 
  
  Tips & Tricks: 
  When using reverse charge, it is important to ensure that all invoices are correctly marked as reverse charge and that all relevant information is included on the invoice. This includes the customer’s name, address, and VAT number. 
  
  Related Information: 
  For more information on reverse charge and how it works in SAP FI Financial Accounting, please refer to SAP Help documentation or contact your local SAP support team.