3081317 - Manual set 'Tax Departure Country' influences the Product Tax Classification on item line - S/4HANA Cloud 2111

In a sales order the product tax classification on the item line is determined by using the country of the shipping plant. The determined product tax classification can be seen on the item line, it’s also possible to manually set a different one of item level. 

The country of the shipping plant also determines the tax reporting country. However, it is possible to overwrite the tax reporting in the sales order header (Sales Order Header -> Billing Documents -> ‘Tax Departure C/R’) to account for different taxation variations, where the shipping plant is not the actual country where tax should be reported to. Usually the fields in the header stay empty. In SAP S/4HANA Cloud Edition you need to activate RITA (Registration for indirect taxation abroad) if you want to use another country than the company code country to report taxes to. Please check the RITA restriction note 2907372. 

With SAP S/4HANA Cloud Edition 2111, if a manual set country is present in ‘Tax Departure C/R’, then this country will be taken to determine the product tax classification for all items instead of the country of the shipping plant, independent if you are using RITA or not. Up to now it was always the country of the shipping plant that has been used to determine the product tax classification, even if another country has manually been set on the sales order header. A change in the ‘Tax Departure C/R’ will trigger a redetermination of the corresponding product tax classification on all item lines. If the ‘Tax Departure C/R’ gets cleared again, then the country of the shipping plant will again be taken to determine the corresponding product tax classification. This explained behavior is only valid for SAP S/4HANA Cloud as of 2111 CE. 

Image: 'Tax departure C/R'  field in the sales order header: