How to easily manage VAT changes for logistics services

Many companies take on global trade and logistics services – export and import declarations, shipment or transport management – on behalf of their customers and partners or other internal units. But calculating the prices and billing these services is often a challenge. AEB's Logistics Cost Management supports the entire billing process – from automated cost and price calculations to invoicing and internal cost allocation.

You can also have Logistics Cost Management calculate the value-added tax applicable to the services provided. This can be individually configured – for example, you can define different VAT rates for different countries, services, or recipients. You can even assign VAT types, such as those helpful for correct booking in the SAP^® system. 

VAT rate changes can be easily planned and set up in the software in advance. All you need to do is enter the new VAT rates into Logistics Cost Management and specify the appropriate validity periods. Then, the software will automatically apply the defined rates to calculations during the specified period. 

When the validity period of the reduced rates ends, the original rate (or any other rate you specify) is then used again for calculations within the defined date.

One of the challenges when it comes to calculating VAT is correctly specifying the period in which the services were performed. In Germany for example, this could lead to problems with the VAT reduction of July 1, 2020 – for example, if an invoice showed the higher VAT rate applicable before that date due to an incorrect date of service. Frank Huster, General Manager of the German Freight Forwarding and Logistics Association (DSLV), warned in a press release: “If the wrong tax rate is specified on an invoice, there is a risk that the input tax deduction for the overstated tax could be denied.”

To obtain the correct service period, Logistics Cost Management can transfer all necessary information from operational systems across a standard web service interface – including the date of each service rendered. The software uses this information to calculate the prices, including the correct VAT.

This process can be illustrated using a sample settlement of shipping services: Suppose you are packing and shipping goods for customers or other departments and wish to bill the recipients for the services rendered. Your logistics software (WMS, TMS, shipping software, etc.) provides all the details needed to calculate the price of the services you have provided for each shipment: number of packages, package types, weight, country of consignee, additional services, and permits obtained. 

AEB's Logistics Cost Management uses this information to calculate the necessary prices for each shipment based on the price scales, rules, and VAT rates you have defined.