Dimension-Based VAT

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  • Published on Feb 19, 2026
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# Dimension-Based VAT Feature

Automatic VAT Override Based on Dimensions

Version: 1.0
Language: English
Use Case: G/L Accounts with dimension-based VAT rules

Overview

The Dimension-Based VAT feature automatically overrides the VAT Product Posting Group on General Journal Lines and Sales Lines (G/L Account type) based on dimension values.

Key Characteristics

  • Works on: G/L Accounts (General Journal Lines, Sales Lines with Type = G/L Account)
  • Trigger: Dimension matching (specific dimension values)
  • Sets: VAT Product Posting Group
  • Result: Automatic VAT rate assignment based on dimensions

How It Works

The Concept

When a user enters a G/L Account on a journal or sales line with specific dimension values, the system automatically determines the correct VAT Product Posting Group.

User enters:
  Account Type: G/L Account
  Account No: 4100 (Revenue - Export)
  Dimension: Department = "EXPORT"
              ↓
System checks:
  Does Dimension match any mapping?
              ↓
System finds:
  Dimension "Department" = "EXPORT" 
  → VAT Prod. Posting Group = "EXPORT" (0% VAT)
              ↓
System applies:
  Line.VAT Prod. Posting Group := "EXPORT"
  → VAT % = 0%

Two Configuration Modes

Mode 1: Managing Dimension (Recommended)

Watch for a specific dimension (e.g., Department).

Setup:
  Managing Dimension Code: "Department"
  
Create mappings:
  If Department = "EXPORT" → VAT: "EXPORT" (0%)
  If Department = "LOCAL" → VAT: "LOCAL" (25%)
  If Department = "DOMESTIC" → VAT: "DOMESTIC" (25%)

When user enters a line with Department = "EXPORT":
→ System finds the mapping → Applies VAT "EXPORT"

Mode 2: Whole Dimension Set (Complex)

Match the entire dimension set combination.

Setup:
  Use entire dimension set
  
Create mappings:
  Dimension Set (Dept=EXPORT, Project=P001) → VAT: "EXPORT"
  Dimension Set (Dept=LOCAL, Project=P001) → VAT: "LOCAL"

When all dimensions match:
→ System finds the mapping → Applies correct VAT

Configuration

Step 1: Enable the Feature

  1. Go to: VAT Rate per Dim. Setup
  2. Find: "Sales Lines" or "General Journals" toggle
    • "Sales Lines": For sales order G/L lines
    • "General Journals": For journal entries
  3. Set: ☑ (Enabled)

Step 2: Choose Configuration Mode

  1. On same setup page, choose ONE of:
    • "Managing Dimension" ← Recommended
    • "Whole Dimension Set"

Option A: Managing Dimension

  1. Check: "Managing Dimension" ☑
  2. Fill: "Managing Dimension Code" = [Choose dimension]
    • Example: "Department"
    • This is the dimension the system will watch for

How it works:

  • System only watches this ONE specific dimension
  • Other dimensions are ignored
  • Much simpler to configure and maintain

Option B: Whole Dimension Set

  1. Check: "Whole Dimension Set" ☑
  2. Leave: "Managing Dimension" unchecked

How it works:

  • System matches the ENTIRE combination of all dimensions
  • More complex to configure
  • Use only if needed

Recommendation: Use Managing Dimension (Option A) in 99% of cases.

Step 3: Create Dimension Mappings

  1. Go to: VAT Rate per Dim. Subpage (from setup page)
    OR
    Search: "VAT Rate per Dim."

  2. Create records based on your chosen mode:

If Using Managing Dimension (Option A):

Record 1:
  Starting Date: 01-01-2025
  [Managing Dimension] Dimension 1 Code: "EXPORT"
  VAT Prod. Posting Group: "EXPORT"

Record 2:
  Starting Date: 01-01-2025
  [Managing Dimension] Dimension 2 Code: "LOCAL"
  VAT Prod. Posting Group: "LOCAL"

Record 3:
  Starting Date: 01-01-2025
  [Managing Dimension] Dimension 3 Code: "DOMESTIC"
  VAT Prod. Posting Group: "DOMESTIC"

If Using Whole Dimension Set (Option B):

Record 1:
  Starting Date: 01-01-2025
  Shortcut Dimension 1 Code: "EXPORT"
  [other dimensions blank]
  Dimension Set ID: [calculated]
  VAT Prod. Posting Group: "EXPORT"

Step 4: Optional - Limit to Specific Accounts

If you only want this feature on specific G/L Accounts:

  1. Go to: VAT Rate per Dim. Acc. (from setup page)
  2. Add the G/L Account numbers you want to apply this to
  3. If this table has entries, system ONLY matches accounts in this table
  4. If table is empty, ALL G/L Accounts are considered

Step 5: Set Up Document Types (Journal-Specific)

For General Journals, choose which document types trigger the feature:

In Setup, enable ONE or MORE of:
  ☑ Blank Document Type (for blank/unspecified types)
  ☑ Invoice (for invoice-type lines)
  ☑ Credit Memo (for credit memo lines)

Real Examples

Example 1: Export Sales Account

Scenario: Revenue account 4100 with Department dimension

Setup:

"Sales Lines" enabled
"Managing Dimension" = "Department"

Mapping:
  Department = "EXPORT" → VAT Prod. Group: "EXPORT" (0%)
  Department = "DOMESTIC" → VAT Prod. Group: "DOMESTIC" (25%)

In Sales Order:

Line Type: G/L Account
Account: 4100 (Revenue)
Dimension (Department): "EXPORT"
                    ↓
System detects Department = "EXPORT"
                    ↓
Applies VAT Prod. Group: "EXPORT"
                    ↓
VAT % = 0%

Example 2: Expense Allocation with Project

Scenario: Expense account 5100 with Project dimension

Setup:

"General Journals" enabled
"Managing Dimension" = "Project"

Mapping:
  Project = "P001" (Internal) → VAT: "NO-VAT" (0%)
  Project = "P002" (Customer) → VAT: "STANDARD" (25%)

In Journal:

Account Type: G/L Account
Account: 5100 (Expense)
Dimension (Project): "P001"
                    ↓
System detects Project = "P001"
                    ↓
Applies VAT Prod. Group: "NO-VAT"
                    ↓
VAT % = 0% (no VAT on internal project)

Example 3: Complex - Whole Dimension Set

Scenario: Multiple dimensions must match

Setup:

"Whole Dimension Set" enabled

Mappings:
  (Department=EXPORT, Region=EU) → "EXPORT" (0%)
  (Department=EXPORT, Region=ASIA) → "EXPORT-ASIA" (0%)
  (Department=DOMESTIC, Region=DK) → "DOMESTIC" (25%)

When posting:

  • System looks at ALL dimension values in the set
  • Needs exact match on all configured dimensions
  • More complex but very powerful

How It Prioritizes When No Match

IF dimension matches a mapping:
  → Use mapped VAT Prod. Posting Group

ELSE IF no mapping matches:
  → Fallback to G/L Account's default VAT Prod. Posting Group

IF still no value:
  → Error or blank (depends on configuration)

Interaction with Location-Based VAT

Important: Managing Dimension vs. Location Code

These are two separate check paths:

SAME LINE (Sales Order, Type = G/L Account):

Step 1: Check if Dimension-Based matches?
        → If YES: Use mapped VAT Prod. Posting Group
        → If NO: Continue to Step 2

Step 2: Check if Location-Based matches?
        → If YES: Use mapped VAT Prod. Posting Group
        → If NO: Continue to Step 3

Step 3: Use G/L Account's default VAT Prod. Posting Group

Priority: Dimension-Based (Step 1) is checked first.

Troubleshooting

Problem: Dimension Match Not Working

Check:

  1. Is "Sales Lines" or "General Journals" enabled?
    → Go to VAT Rate per Dim. Setup
    → Check appropriate toggle

  2. Is "Managing Dimension" or "Whole Dimension Set" selected?
    → Check which mode is enabled

  3. Does mapping exist for your dimension value?
    → Go to VAT Rate per Dim.
    → Check mapping exists

  4. Is the G/L Account in the restriction list (if used)?
    → Go to VAT Rate per Dim. Acc.
    → Check if your account is listed (if table has entries)

  5. Does the dimension value match exactly?
    → Case-sensitive check
    → No extra spaces

Solution:

  • Create missing mapping or
  • Add account to whitelist or
  • Fix dimension value spelling

Problem: Wrong VAT Group Applied

Check:

  1. Is this a Managing Dimension or Whole Dimension Set setup?

  2. For Managing Dimension:

    • Check which dimension is being watched
    • Is the actual dimension correct?

  3. For Whole Dimension Set:

    • Do ALL dimensions in the set match?
    • Missing one dimension = no match

  4. Is Location-Based VAT also enabled?
    → Location-based might be overriding dimension-based
    → Check which feature should take priority

Solution:

  • Update mapping to correct VAT group or
  • Disable Location-Based if not needed or
  • Adjust dimension values

Best Practices

DO

✓ Use Managing Dimension (simpler, 99% of cases)
✓ Use meaningful dimension names (EXPORT, DOMESTIC, LOCAL)
✓ Document your mapping logic
✓ Test before go-live
✓ Validate with finance team
✓ Monitor which accounts use this feature

DON'T

✗ Use Whole Dimension Set unless really needed (complex)
✗ Mix dimension-based and location-based unnecessarily
✗ Leave mappings undocumented
✗ Have overlapping or conflicting mappings
✗ Forget about account restrictions (might limit feature)

Common Use Cases

Use Case 1: Export Sales

Account: 4100 (Revenue)
Dimension: Department = "EXPORT"
                   ↓
                VAT: 0% (no VAT on exports)

When: Selling to non-EU countries

Use Case 2: Internal Projects

Account: 5100 (Project Expenses)
Dimension: Project = "INTERNAL"
                 ↓
              VAT: 0% (no VAT on internal)

When: Project costs that shouldn't have VAT

Use Case 3: Grant-Funded Activities

Account: 4200 (Grant Revenue)
Dimension: Department = "GRANTS"
                    ↓
                 VAT: 0% (VAT-exempt)

When: Grant income is VAT-exempt

Configuration Checklist

SETUP:
☐ Choose between "Sales Lines" or "General Journals"
☐ Choose between "Managing Dimension" or "Whole Dimension Set"
☐ If Managing Dimension: Set the Managing Dimension Code

MAPPINGS:
☐ Create all needed dimension value mappings
☐ Set correct VAT Prod. Posting Group for each

RESTRICTIONS (optional):
☐ If needed: Add G/L Accounts to VAT Rate per Dim. Acc.
☐ If not needed: Leave empty (applies to all accounts)

DOCUMENT TYPES (if using General Journals):
☐ Enable the document types that should trigger feature

VAT POSTING SETUP:
☐ Ensure VAT Posting Setup entries exist for all new VAT groups

TESTING:
☐ Test dimension match
☐ Test no match (fallback)
☐ Test account restrictions
☐ Test posting

VALIDATION:
☐ Finance team approves
☐ Go-live ready

FAQ

Q1: Should I use Dimension-Based or Location-Based VAT?

A:

  • Location-Based: If VAT depends on WHERE items ship from (use this for Items)
  • Dimension-Based: If VAT depends on WHICH DIMENSION on G/L accounts (use this for G/L)

Most companies use Location-Based. Dimension-Based is for specialized cases.

Q2: Can I use both Managing Dimension and Whole Dimension Set?

A: No, choose ONE:

  • Managing Dimension: Watch one dimension (simpler) ← RECOMMENDED
  • Whole Dimension Set: Match entire set (complex)

Q3: What if G/L Account has NO dimensions?

A:

  1. If no dimensions set on line, system won't match anything
  2. Falls back to G/L Account's default VAT
  3. Feature simply doesn't apply (no error)

Q4: Can I use this with Items?

A: No, only with:

  • G/L Accounts in sales orders
  • General Journal Lines

For Items, use Location-Based VAT instead.

Q5: What's the difference between "Sales Lines" and "General Journals"?

A:

  • Sales Lines: Applies to G/L Account type lines in sales orders
  • General Journals: Applies to general journal entries

You can enable one, both, or neither.

Summary

The Dimension-Based VAT feature:

✓ Automatically overrides VAT based on dimensions
✓ Works on G/L Account lines (journals and sales)
✓ Triggered by dimension values
✓ Sets VAT Product Posting Group
✓ Has two modes: Managing Dimension (simple) or Whole Dimension Set (complex)
✓ Falls back to account default if no match
✓ Can restrict to specific accounts

When to Use:

USE THIS FEATURE IF:
✓ You have G/L Accounts with special VAT rules
✓ VAT depends on dimensions (Department, Project, etc.)
✓ You need automatic dimension-based overrides
✓ You want to avoid manual VAT selection

DON'T USE IF:
✗ You use Items (use Location-Based instead)
✗ VAT depends on location, not dimensions
✗ You don't use dimensions on G/L accounts

Related Features

  • Location-Based VAT - For Items (different trigger)
  • Partner Type - Customer classification (different mechanism)
  • VAT Posting Setup - Determines actual rate

Last Updated: February 2025
Version: 1.0

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