What to consider for INTRASTAT reporting?

Intrastat: Why?

Ever since January 1st 1993 a single European market exists for the member states of the European Union. However, there is a need to record movements of goods across the borders of the member states to a) assess the international competitiveness and dependency regarding import and export of products and b) monitor price developments in foreign trade. Therefore there is a need to collect information on goods movements within the EU, hence the introduction of Intrastat.

Please note that Intrastat reporting should not be confused with EC Sales lists which are used to collect information on all sales from UK VAT registered traders to VAT registered traders in other EU Member States.

Intrastat: When?

A company has to submit information to the local authorities when it trades within the European Union. It is enforced by law. Business within the United Kingdom need to supply a monthly report when the export value exceeds £250,000 or import value exceeds £600,000 annually. Else reporting is done every quarter.

Intrastat: What?

The level of detail in the report may differ for each member state, but the following data seems mandatory for all member states:

Dispatches and Receipts:

  • Mode of transport when crossing the border (i.e. road, rail, water, air)
  • Type of business transaction (i.e. regular trade, sample sale, consignment, intercompany stock transfer, customer returns)
  • Commodity code (grouping of products to allow uniform reporting within the European Union)
  • Value (the value should also include the costs for transport; a statistical value must be determined in case of sample sale or intercompany stock transfer)
  • Weight

Receipts:

  • Country of origin of the goods received (the country where the goods have been manufactured; when manufacturing has taken place in multiple countries, then use that country to which the most value has been added during the entire manufacturing process)
  • Country of despatch

The SAP R/3 system uses billing information to compile the intrastat report. Therefore virtual billing documents have to be issued in the system for sample sales and intercompany stock transfers.

It is assumed that billing documents are issued on the day that goods leave the warehouse. However, the customer may negotiate that billing can only be triggered when the goods have been received at the customer site (proof of delivery scenarios). In those cases a delay regarding billing could make Intrastat reporting more complex when the goods issue is on month x and goods receipt in month x+1.

Handling of customer complaints and the impact on Intrastat reporting

For example, goods are delivered to a customer in another EU member state. When the goods are received and inspected, your customer discovers that part of the delivery is damaged. For the subsequent damaged goods regulations or warranty process, the following possibilities exist:

  1. The damaged goods are returned for a credit memo
    For the returned goods, you need to submit an INTRASTAT declaration for receipts. The values in the credit memo must be paid.
  2. The damaged goods remain with the customer and a credit memo is issued
    You need to create a declaration for the dispatch. The amount of the credit memo for the damaged goods must be included.
    If the INTRASTAT declaration for the dispatch has not yet been submitted, the credit memo can be excluded immediately.
    If the INTRASTAT declaration has already been submitted, the original declaration for the dispatch must be corrected.
  3. The damaged goods are returned and you deliver a cost-free replacement
    You need to submit an INTRASTAT declaration for receipts for the returned damaged goods. For the replacement delivery, you need to submit an INTRASTAT declaration for dispatches.
  4. The damaged goods remain with the customer and you deliver a cost-free replacement
    For the delivered replacement goods, you need to submit an INTRASTAT declaration for dispatches (again).

As shown in the examples above, sometimes debit and credit notes need to be included when a financial correction was necessary linked to a business transaction involving import or export of goods. Complexity regarding Intrastat reporting may occur when the goods were delivered and invoiced in month x and the financial correction was registered in month x+1.

Intrastat: Executing the report in SAP R/3

In order to execute the INTRASTAT Declaration in SAP R/3, you need to perform three main steps for receipts and dispatches:

  1. Collect transactional data from the SAP system and store them in a worklist.
    During this phase you can analyse and correct missing data necessary for INTRASTAT Declarations while executing a test run.
    When you execute an update run, then the worklist is created that is necessary for the second step.
  2. Prepare INTRASTAT Declaration by deleting, changing and/or adding entries in the worklist.
  3. Issue the INTRASTAT Declaration based on the data in the worklist.

It is advised to perform a material consistency check regularly to avoid incomplete transactional data in the SAP system.
It is possible to execute a Material Master Consistency Report (transaction code VE81). Issues may be found in the maintenance of weights, commodity code, country of origin and various codes to identify and control import/export processes.
During the processing of the Intrastat report also missing transactional data may trigger the need for manual intervention (transactions MEIS, VI99, VEFU). Apart from the missing material specific master data, also incoterms and (statistical) value might not be captured during the purchase or sales process. This needs to be maintained before the Intrastat report can be submitted.

Some companies have special business triggering import/export within the EU for which data cannot be collected via billing documents. This normally happens when the standard SAP R/3 system has been enhanced. Special custom made programs have to be created to allow reporting of these exceptional business transactions.

Conclusion

Pay close attention to the quality of the master data. That would speed up the lead time for collecting and submitting the Intrastat report.
In addition the company needs to be aware of exceptional transfer of goods between the member states of the European Union when they are not identified by collecting billing information.

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