Tips and best practices

These new VAT capabilities are effective as of January 1, 2021. Be sure that when running transactions, you specify a transaction date on or after January 1, 2021.
The deemed supplier and ecommerce legislative changes take effect on July 1, 2021. Be sure that when running transactions, you specify a transaction date on or after July 1, 2021.
Be sure to include the VAT Registration ID for all B2B use cases.
- For B2B transactions, the VAT registration ID must be included in the transaction using the businessIdentificationNo field.
- For sales documents, this represents the Customer’s VAT ID.
- For purchase documents, this represents the Supplier’s VAT ID.
- For B2C transactions, this field should be left empty.
- It is important to include the two-digit country ISO code prefix along with the VAT registration ID (for example, "HRU12345678").
- Keep in mind that AvaTax does not validate the VAT registration ID as part of the determination process.
- VAT IDs are country specific, and each EU member country has a slightly different format for their VAT numbering system. If a customer is VAT registered in the Republic of Ireland, for example, do not include that Republic of Ireland VAT ID for other countries.
The VAT enhancement project has added several parameters that will be available in the AvaTax UI under “Company Details” and "Nexus Details," and parameters that are normally set in the Avalara Company and Nexus UI can be passed in the transaction.
Singular transactions can be tested in the Avalara UI using all the available parameters.
Be sure to include country establishment information for the Customer (Sales) and Supplier (Purchase). This information is a key component in the calculation logic. In the EU, this is referred to as “fixed establishment”. Fixed establishment is used in determining the place of supply and also whether reverse charge applies. The definition for an establishment is that a company must have a sufficient degree of permanence and human and technical resources to allow it to receive and use the services for its economic activities.
Make sure to send all required addresses based on your Product Type (physical goods, digital goods, general services) as previously described in the Address Table. A best practice is to provide all addresses and let the calculation engine to process the inputs to determine your VAT calculation.
When utilizing the basic currency conversion capability, be sure to include the exchangeRate, as described in the Invoice currency conversion topic.
You might find yourself using the isSellerImporterOfRecord field on transactions. This field specifies whether the transaction should have value-added taxes calculated with the seller as the importer of record. Some taxes only apply if the seller is the importer of record for a product. In cases where companies are working together to ship products, there may be mutual agreement as to which company is the entity designated as importer of record.
This field is can be somewhat confusing, as the term "seller" in this case refers to the Avalara client. The importer of record will then be the company designated to pay taxes marked as being obligated to the importer of record.
- For sales documents, this field specifies whether the Avalara client in this transactions is the importer of record.
- For purchase documents, this field specifies whether the Avalara client, who is the buyer in this transaction, the importer of record or whether the supplier is.