Domestic reverse charge transaction

This example shows how to create a domestic reverse charge transaction.

A Reverse Charge is a transaction that supports an accounting/reporting entry for VAT when the supplier of a product/service does not charge the buyer VAT. Instead of being charged VAT by the supplier, the buyer receiving the product/service assesses the Input VAT due on the purchase, and generates a corresponding Output VAT entry. The practical effect of this is there is typically no net tax payable on the transaction. Reverse Charge is commonly required in the European Union (EU) to facilitate intra-EU cross-border, business-to-business trade without requiring the supplier to register in all EU Member States.

AvaTax will generate a reverse charge when the following criteria are met:

The transaction uses a purchase document type - PurchaseOrder or PurchaseInvoice.
The transaction is a business to business transaction identified by the seller's VAT registration ID used in businessIdentificationNo field. (Note that the BIN must also include the two-digit ISO country code.)
The supplier did not charge VAT.
The destination address is in an EU country.
The goodsPlaceOrServiceRendered address is not the same country as the pointOfOrderAcceptance country.

A reverse charge calculates both input and output tax types. So for example, consider a transaction with a purchase amount of a €100.00 product by a buyer in Belgium. The product is standard rated. Input VAT and Output VAT is calculated at 19% as €19.00 each. Input VAT minus Output VAT = €0 total tax.

In this example:

The document type is a Purchase invoice.
This is a domestic transaction, so the shipFrom, shipTo, and goodsPlaceOrServiceRendered addresses are in Belgium.
The pointOfOrderAcceptance address is in Estonia.
This assumes the customer (Avalara client) does not have permanent establishment (Nexus) in Estonia and that your supplier is established in the goodsPlaceOrServiceRendered country.

Example request

curl
    -X POST
    -H 'Accept: application/json'
    -H 'Authorization: Basic aHR0cHdhdQNoOmY='
    -H 'Content-Type: application/json'
    --data '{
      "lines": [
        {
          "number":"1",
          "quantity":100,
          "amount":100,
          "taxCode":"P0000000",
          "itemCode":"Y0001",
          "description":"Yarn",
          "discounted": false,
          "taxIncluded": false
        }
      ],
      "addresses": {
        "shipFrom":{
          "line1":"Haberstrabe 25",
          "line2":"37715 Duderstadt",
          "city":"Duderstadt",
          "region":"Duderstadt",
          "country":"BE",
          "postalCode":""
        },
        "shipTo":{
          "line1":"Lutteranger 4",
          "line2":"37077 Gottingen",
          "city":"Gottingen",
          "region":"Gottingen",
          "country":"BE",
          "postalCode":""
        },
        "pointOfOrderOrigin":{
          "line1":"Lutteranger 4",
          "line2":"37077 Gottingen",
          "city":"Gottingen",
          "region":"Gottingen",
          "country":"BE",
          "postalCode":""            
        },
        "goodsPlaceOrServiceRendered":{
          "line1":"Haberstrabe 25",
          "line2":"37715 Duderstadt",
          "city":"Duderstadt",
          "region":"Duderstadt",
          "country":"BE",
          "postalCode":""
        },
        "pointOfOrderAcceptance":{
          "line1":"Viljandi maantee 17",
          "line2":"79201 Jarva maakond",
          "city":"Karu",
          "region":"Karu",
          "country":"EE",
          "postalCode":"" 
        },
        "import":{
          "line1":"Haberstrabe 25",
          "line2":"37715 Duderstadt",
          "city":"Duderstadt",
          "region":"Duderstadt",
          "country":"BE",
          "postalCode":""
        }
      },
      "parameters":[
        {
          "name": "Transport",
          "value": "None"
        }
      ],
      "type":"PurchaseInvoice",
      "companyCode":"DEFAULT",
      "date":"2021-10-10",
      "customerCode":"ABC",
      "businessIdentificationNo":"BE1234567890",
      "commit":true,
      "currencyCode":"EUR",
      "description":"Yarn"
    }'
    'https://sandbox-rest.avatax.com/api/v2/transactions/create'

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