Is Tax Depreciation Area mandatory for European Countries

[amarnath_r_dasa]

Dear Colleagues

I am implementing Asset Accounting for a client who has operations in several European Countries.

Ex: Germany, Belgium, France, Italy etc.,

Per customer requirement, We have made the Leading Ledger "0L" as US GAAP accounting principle.

I would like to seek your expert opinion regarding Depreciation Area.

1. The customer does not know anything in SAP as they are greenfield.
2. For Asset Accounting, they are asking if Tax Depreciation Area is mandatory or optional?

       For this, I told them it is a business call during all these years if they have maintained separate books of accounts for Tax purposes, then I said yes          we need Tax Depreciation Area which will be mapped to new Non Leading Ledger "ZL - For Tax".

However, the client is asking for confirmation from us, stating if it is mandatory then we will create Tax Depreciation Area and link to Tax Non-leading Ledger else it can be ignored.

Pls advise.

Thanks in Advance

[ajaycwa1981]

Hi Amar

Its not mandatory. It is required only when your local laws ask you to valuate your fixed assets differently for tax purposes..

So, just check with them if they need a separate asset valuation for tax purposes in all these countries

Also, it sounds unusual that you selected Book dep  area 01 to be US Gaap. Usually 01 should be as per local laws..

Note that area 01 should correspond to what you are doing in Leading ledger in New GL. If your leading ledger corresponds to US gaap, then what you are doing is right

Also note that dep  from area 01 would flow to CO and will form a part of your product cost. if you want dep  as per US gaap to be part of product cost, its fine

Br. Ajay M

[amarnath_r_dasa]

Hello Ajay

Many Thanks for your quick response.

Yes, you are right my leading ledger is mapped to US GAAP it was an intended change the customer wanted to have. I told them then Leading Ledger will normally be Local GAAP but it seems they want US GAAP. So, I have changed.

Thanks & Regards

Amar

[ajaycwa1981]

Hi Amar

Then I think you are safe

Just check with them if the local laws insist on separate valuation of assets for tax purposes... rest all looks fine to me

Tax dep  area is not mandatory.

Let me know if you still have Qs. Else you may close the thread

Br. Ajay M

[amarnath_r_dasa]

Hello Ajay

Here is the actual issue, they say that they don't know whether they need separate valuation for tax purposes 😞

I tried several ways to ask the same question but am in vain.

[former_member351125]

Hello Amarnath,

The only book that is mandatory is Book 01. If your company codes have local currencies then parallel depreciation areas are mandatory as well. Tax book is optional.

Though tax books is not yet clear if needed or not, you can still create one tax book in reference to book 01. So later on, if the business decided to have a tax book you have one ready, though valuation might be different, you can analyze and post adjustment on tax book.

Again, if business does not know about EUR tax depreciation or they are not reporting it, maybe they are not doing it.

Thanks!

Jhero