1. An EC Tax Code is the tax rate charge to a sale made to a country which is part of the European Union
ES-GB EC Goods standard rate = 0%
ER-GB EC Goods reduced rate = 0%
EZ-GB EC Goods zero rate = 0%
ESSS-GB EC Services - sales = 0%
2. What are the requirements to use the EC Tax code on sale transactions?
a. A valid Tax Registration Number from a country which is part of the European Union. This is found on the Customer record > Financial tab > Tax Reg. Number
b. The Ship to Country (Shipping Address) must be a part of the European Union. The goods must be shipped outside UK.
3. Should the country of Tax Registration and Ship to Country be the same?
Yes, country of tax registration should be the same as that of the ship to country. System do allow however, transactions to be created and zero rated if the other country happens to be part of the European Union as long as it is not same country as the vendor/seller.
4. For the EC Tax Code to populate on the Sales Transaction, setup the Tax Code & Tax Schedule accordingly.
I. Customer & Subsidiary
- Customer is based on UK (Subsidiary)
- Nexus setup on the Subsidiary is only UK.
- Shipping Address would be in Spain.
II. EC Tax Code
a. Edit the Tax Code - E-GB
b. Mark the EC Code box.
c. Set Notional Rate Derived From to S-GB (Standard Rate - 20%)
a. Open the Item Record.
b. View & Edit the Tax Schedule.
c. Click the Non US Nexuses tab.
d. Look for the UK Nexus
e. Set Sales Tax Code to S-GB (Standard Rate - 20%).
*S-GB (Standard Rate - 20%) = Notional tax. Tax that would have been charged had it been a taxable domestic supply.