3736615 - How the tax classification being determined in service contracts - SAP S/4HANA Cloud Public Edition

The customer would like to know how the tax classification being determined in service contracts.

SAP S/4HANA Cloud Public Edition

• Step 1: If payer has VAT registration number maintained in the business partner master data and payer <> sold-to party, the system takes the customer tax classification from the payer.
• Step 2: If step 1 does not apply and the ship-to party has VAT registration number, the system takes customer tax classification from the ship-to party.
• Step 3: If step 2 does not apply and the system takes customer tax classification from the sold-to party.

1. It is the current standard behavior that tax in the service contract is for reference only. Note that the actual tax determination happens in billing which is based on the payer.
2. If alignment is required (for example, to avoid tax in the corresponding billing document request/invoice), maintain the payer’s master data (VAT registration and customer tax classification) so that the intended non-taxable scenario is reflected in billing tax determination according to the tax rules.

3666961 - Tax classification determined through payer in Billing Document Requests for Service Contracts

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