Automatic Business type Classification

New
  • Published on Feb 19, 2026
  • 8 minute(s) read
  • LG
 Prev Next

# Partner Type / Customer Type Feature

Automatic Business Type Classification

Version: 1.0
Language: English
Related Feature: Advanced VAT for Sales

Overview

The Partner Type feature automatically classifies customers as either Company or Person based on their VAT Registration Number.

This is used in combination with the Advanced VAT for Sales feature to determine different VAT Business Posting Groups for:

  • B2B customers (companies)
  • B2C customers (private persons)
  • Different shipping countries

How It Works

The Logic

When a Customer is created or modified:

IF Customer has VAT Registration No. filled in:
   → Partner Type = COMPANY (B2B)
   → Use B2B VAT rates

IF Customer has NO VAT Registration No.:
   → Partner Type = PERSON (B2C)
   → Use standard/consumer VAT rates

Real Example

Customer 1: ABC GmbH (German company)
  VAT Registration No: DE123456789 ← Filled
  Partner Type: COMPANY (automatic)
  → Uses B2B VAT rates for Germany

Customer 2: John Smith (German person)
  VAT Registration No: [blank]
  Partner Type: PERSON (automatic)
  → Uses standard VAT rates

Configuration

Enable the Feature

  1. Go to: VAT Rate per Dim. Setup
  2. Find field: "Automatic determine CustomerType"
  3. Set to: ☑ (Enabled)
  4. Save

How It's Used

When "Advanced VAT for Sales" is also enabled:

The system uses Partner Type + Shipping Country to look up the correct VAT Bus. Posting Group.

Example mapping:

Starting Date  | Shipping Country | Partner Type | VAT Bus. Posting Group
───────────────┼──────────────────┼──────────────┼──────────────────────
01-01-2025     | Germany          | COMPANY      | EU-INTRA
01-01-2025     | Germany          | PERSON       | CONSUMER-DE
01-01-2025     | Denmark          | COMPANY      | DOMESTIC
01-01-2025     | Denmark          | PERSON       | DOMESTIC

Partner Type Values

In the System

The Partner Type field can have these values:

1 = COMPANY (B2B)
    - Customer has VAT Registration Number
    - Is a business/company
    - Gets B2B VAT treatment

2 = PERSON (B2C)
    - Customer has NO VAT Registration Number
    - Is a private person/consumer
    - Gets standard consumer VAT treatment

How System Determines It

Check Customer.VAT Registration No. field:

If filled (has a value):
  → Partner Type := 1 (COMPANY)

If blank/empty:
  → Partner Type := 2 (PERSON)

Use Cases

Use Case 1: B2B EU Sales with Auto Classification

Scenario: Selling to Germany

Setup:
  Mappings for Germany:
  ┌─────────────────────────────────────────┐
  │ Shipping Country: Germany               │
  │ Partner Type: COMPANY                   │
  │ VAT Bus. Posting Group: EU-INTRA        │
  │ (0% VAT for B2B)                        │
  │                                         │
  │ Shipping Country: Germany               │
  │ Partner Type: PERSON                    │
  │ VAT Bus. Posting Group: CONSUMER-DE     │
  │ (19% VAT for consumer)                  │
  └─────────────────────────────────────────┘

Customer Created:
  Company "SAP SE" with VAT No: DE123456789
  → System auto-sets: Partner Type = COMPANY
  → Sales Order to Germany
  → System finds mapping: COMPANY + Germany
  → VAT Bus. Posting Group = EU-INTRA (0%)

Customer Created:
  Person "Hans Mueller" with no VAT No
  → System auto-sets: Partner Type = PERSON
  → Sales Order to Germany
  → System finds mapping: PERSON + Germany
  → VAT Bus. Posting Group = CONSUMER-DE (19%)

Use Case 2: Multi-Country with Different B2B Rules

Setup:
  ┌──────────────┬───────────────┬────────────────────┐
  │ Country      │ Partner Type  │ VAT Bus. Group     │
  ├──────────────┼───────────────┼────────────────────┤
  │ Denmark      │ COMPANY       │ DOMESTIC           │ (25%)
  │ Denmark      │ PERSON        │ DOMESTIC           │ (25%)
  │ Germany      │ COMPANY       │ EU-INTRA           │ (0%)
  │ Germany      │ PERSON        │ CONSUMER-DE        │ (19%)
  │ UK           │ COMPANY       │ EXPORT             │ (0%)
  │ UK           │ PERSON        │ EXPORT             │ (0%)
  └──────────────┴───────────────┴────────────────────┘

Example: Sale to German company
  Order shipping to Germany
  Customer Partner Type = COMPANY (auto-detected)
  → Correct B2B rate (0% VAT)

Example: Sale to German consumer
  Order shipping to Germany
  Customer Partner Type = PERSON (auto-detected)
  → Correct consumer rate (19% VAT)

Step-by-Step Setup

Step 1: Enable Auto-Classification

  1. Search: "VAT Rate per Dim. Setup"
  2. Find field: "Automatic determine CustomerType"
  3. Check the box: ☑
  4. Save

Step 2: Configure Mappings with Partner Type

  1. Go to: VAT Rate Adv Sales - Setup for Product Posting Group
    OR
    Search: "VAT Adv Sales Bus Post Grp"

  2. Create/Edit records including Partner Type:

Example Record 1:

Starting Date:           01-01-2025
Shipping Country:        DE (Germany)
Partner Type:            COMPANY
VAT Bus. Posting Group:  EU-INTRA

Example Record 2:

Starting Date:           01-01-2025
Shipping Country:        DE (Germany)
Partner Type:            PERSON
VAT Bus. Posting Group:  CONSUMER-DE

Step 3: Verify VAT Posting Setup

Ensure entries exist for all combinations:

(EU-INTRA, [your B2B VAT Prod. Group])  = 0%
(CONSUMER-DE, [your consumer VAT])      = 19%

Manual Override

What If Auto-Classification Is Wrong?

You can manually change the Partner Type:

  1. Open Customer card
  2. Find field: "Partner Type"
  3. Change value manually if needed
  4. Save

Use this for:

  • Edge cases (unusual customer types)
  • Corrections if VAT No. was initially wrong
  • Special business rules

Common Scenarios

Scenario 1: B2B Germany Sale

Customer:     BASF SE
VAT Reg No:   DE123456789 ← Has VAT number
Partner Type: COMPANY (auto-detected)
Ship-to:      Germany
             ↓
Lookup:      Germany + COMPANY
             ↓
VAT Bus. Grp: EU-INTRA
             ↓
VAT Rate:    0% (B2B)

Scenario 2: B2C Germany Sale

Customer:     Anna Mueller
VAT Reg No:   [blank] ← No VAT number
Partner Type: PERSON (auto-detected)
Ship-to:      Germany
             ↓
Lookup:      Germany + PERSON
             ↓
VAT Bus. Grp: CONSUMER-DE
             ↓
VAT Rate:    19% (Consumer)

Scenario 3: B2B Denmark Sale (No Difference)

Customer:     LEGO A/S
VAT Reg No:   DK12345678 ← Has VAT number
Partner Type: COMPANY (auto-detected)
Ship-to:      Denmark
             ↓
Lookup:      Denmark + COMPANY
             ↓
VAT Bus. Grp: DOMESTIC
             ↓
VAT Rate:    25% (Domestic - same for B2B & B2C)

How It Interacts with Other Features

With Advanced VAT for Sales

Sales Order Created:
  ↓
1. Customer Partner Type is read (COMPANY or PERSON)
2. Ship-to Country is read (Germany, Denmark, etc.)
3. System looks up in mapping table:
   (Shipping Country, Partner Type) → VAT Bus. Posting Group
4. VAT Bus. Posting Group is applied
5. With Location Code, also applies VAT Prod. Posting Group
6. Final VAT rate determined from VAT Posting Setup

With Location-Based VAT

Combined Feature:
  Partner Type (from customer)
  + Shipping Country (from customer)
  + Location Code (from sales line)
       ↓
  Determines both:
  1. VAT Bus. Posting Group (country + partner type)
  2. VAT Prod. Posting Group (location)
       ↓
  Together determine final VAT %

Example:

Customer: German company (COMPANY)
Location: DE-STORE
Order to: Germany

Step 1: Partner Type = COMPANY
Step 2: Look up (Germany, COMPANY) → VAT Bus. = EU-INTRA
Step 3: Look up (DE-STORE, STANDARD) → VAT Prod. = B2B-INTRA-EU
Step 4: VAT Posting Setup (EU-INTRA, B2B-INTRA-EU) = 0%
Result: 0% VAT ✓

Troubleshooting

Problem: Partner Type Not Auto-Filled

Check:

  1. Is "Automatic determine CustomerType" enabled?
    → Go to: VAT Rate per Dim. Setup
    → Check: "Automatic determine CustomerType" = ☑

  2. Did you fill/clear the VAT Reg. No. AFTER enabling?
    → Create new customer or edit existing one
    → The system might not update existing customers

Solution:

  1. Enable the feature
  2. Create new customers (auto-filled)
  3. For existing: Manually set Partner Type or edit customer again

Problem: Wrong VAT Rate Applied

Check:

  1. Customer Partner Type is correct?
    → Open Customer card
    → Check Partner Type field

  2. Mapping for (Country, Partner Type) exists?
    → Go to: VAT Adv Sales Bus Post Grp
    → Search for your country + partner type combination

  3. VAT Posting Setup has the combination?
    → Go to: VAT Posting Setup
    → Check for (Bus. Group, Prod. Group) entry

Solution:

  • Create missing mapping or
  • Create missing VAT Posting Setup entry or
  • Manually correct Customer Partner Type

FAQ

Q1: What's the difference between COMPANY and PERSON?

A:

  • COMPANY: Has VAT Registration Number (B2B customer)
  • PERSON: Has no VAT Registration Number (B2C/consumer)

The system uses this to apply different VAT rules per location.

Q2: Can I manually change Partner Type?

A: Yes, you can edit the Partner Type field manually in Customer card. But normally it should be auto-filled.

Q3: What happens if I add VAT Reg. No. to a PERSON customer?

A:

  1. Customer is already classified as PERSON
  2. Manually edit Partner Type to COMPANY
  3. Or delete and recreate customer
  4. System won't auto-change existing customers

Q4: Does this affect all countries?

A: Yes, if you have mappings for (Country, Partner Type) combinations. It works globally.

Q5: What if I don't want this automatic classification?

A:

  1. Leave "Automatic determine CustomerType" unchecked
  2. Manually set Partner Type per customer
  3. Feature still works, just manual instead of automatic

Best Practices

1. Always Fill VAT Reg. No. for Companies

✓ DO: Fill VAT Reg. No. for all company customers
   → System auto-classifies as COMPANY
   → Correct B2B rates apply
   
✗ DON'T: Leave VAT Reg. No. blank for companies
   → System thinks it's a PERSON
   → Wrong VAT rate applied

2. Configure All Country + Partner Type Combinations

✓ DO: Create mappings for:
   (Germany, COMPANY)
   (Germany, PERSON)
   (Denmark, COMPANY)
   (Denmark, PERSON)
   Etc.
   
✗ DON'T: Forget one combination
   → Orders for that type get wrong VAT

3. Document Your Mapping Logic

✓ DO: Create reference table showing:
   Country | Partner Type | VAT Bus. Group | VAT %
   
✗ DON'T: Leave mappings undocumented
   → Hard to maintain
   → Easy to make mistakes

4. Enable Auto-Classification

✓ DO: Enable "Automatic determine CustomerType"
   → Less manual work
   → Fewer errors
   
✗ DON'T: Disable it if you want consistent classification
   → Manual classification is error-prone

Configuration Checklist

☐ "Automatic determine CustomerType" enabled
☐ "Advanced VAT for Sales" enabled (for usage)
☐ All (Country, Partner Type) combinations mapped
☐ VAT Posting Setup entries for all combinations
☐ Test with COMPANY customer
☐ Test with PERSON customer
☐ Verify correct VAT rates apply
☐ Finance team validates setup
☐ Users trained on the feature
☐ Documentation updated for your company

Summary

The Partner Type feature:

✓ Automatically classifies customers as COMPANY or PERSON
✓ Based on VAT Registration Number
✓ Used for different VAT treatments per business type
✓ Works with Advanced VAT for Sales feature
✓ Combined with Shipping Country for lookup
✓ Determines VAT Bus. Posting Group
✓ Can be manually overridden if needed

Related Features

  • Advanced VAT for Sales - Uses Partner Type in combination with Country
  • Location-Based VAT - Works together to determine full VAT rate
  • VAT Posting Setup - Determines actual VAT % for the combination

Last Updated: February 2025
Version: 1.0

Related articles

abakion@abakion.com