Input tax deduction for mixed purpose expenditures –
audit-proof with VERA
Increasing the volume of deductible input tax
Whenever a company with non-taxable and taxable sales asserts the amount of deductible input tax, a wide range of requirements has to be met. The tax authorities require the allocation of the taxed expenditure to the corresponding output revenue. In practice, this direct allocation becomes a challenge, especially for banks, insurance companies, and health organizations. The majority of revenues are exempt from tax and consequentially exclude the deduction of input tax. However, there are taxable or non-taxable but deductible expenses, for instance, cross-border transactions.
VERA – the only software for input tax distribution
The solution is a system to determine direct allocation. This procedure is the core of our software VERA. VERA determines the correct deduction rate for each relevant business transaction. You will never be left with the pro-rata rate due to a lack of alternatives again.
Gross- or net postings? Irrelevant!
With VERA, you streamline accounting procedures and automate the deduction process – while the tax department is entirely in charge of the input tax deduction. VERA separates the input tax distribution from the initial posting of the invoice. The input tax deduction is determined independently of tax codes based on master data defined by the tax department. The complete integration into the ERP system enables the automated evaluation of every relevant business transaction and adjustment postings without any system interruption.
Audit conformity and compliance
All legal requirements are met; the embedded information system also provides comprehensive support for tax audits. The identification and audit-proof documentation at the line item level allow for the disclosure of the deduction potential and the transparency of its audit trail. As a result of the process optimizations by VERA, tax departments can now focus on the determination of the deduction rates and the evaluation of particular cases. That is why corporate groups and individual companies have been relying on VERA for many years.
§ 15a VAT Act
Furthermore, VERA sets up adjustment objects for all circumstances subject to §15a of the German VAT Act (UStG). During the entire observation period, these are reviewed every month for any changes. In addition, VERA performs input tax adjustment postings, which are determined accordingly, and records all transactions for each adjustment object.
- Optimization and automation of the reporting process for input tax
- Compliance with all legal requirements
- Expandable for country-specific requirements
- Detailed and individual breakdown of deduction rates for input tax regarding accounts, cost centers, internal orders, projects, WBS elements, and real estate
- Data retention with clear time reference incl. audit-proof documentation of all corrections
- Technical environment: Fully integrated into the SAP system or connected via an interface
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