SAP Concur is a modern tool for managing business travel and supplier invoices.
SAP Concur consists of the following components:
As a global solution, SAP Concur is perfectly adapted to international standards, and it is integrated with other large systems like those of UBER, Airbnb, etc. However, when it comes to meeting the legal and tax requirements in the Polish context, the system requires multiple adjustments to ensure correct calculations in the accounting books as well as compliance with tax requirements, in particular in respect of VAT.
From the tax point of view, the issues that are most often raised during the implementation of Concur Expense primarily concern its adaptation to VAT reporting (JPK standard audit files) – after the data have been transferred to the financial and accounting software. In practice, we most often see integration with the SAP system, but from time to time import to other programmes is also needed.
Thanks to our knowledge and experience, the MDDP Outsourcing team has acted as an advisor in the integration of SAP Concur Expense with the SAP system in an international construction company.
In the first phase, the following aspects were analysed and adjusted, among others:
Expenses related to settlements with employees are, as a rule, booked on the employee’s account. If an invoice submitted by an employee contains deductible input VAT, it is possible to correctly record the VAT amounts in the relevant registers. To obtain accurate data relating to tax codes and input tax calculation, it is necessary to configure the tax table in SAP Concur in the same way as in SAP.
However, in such cases, the standard version of Concur does not provide extra fields required for the proper reporting of transactions in JPK VAT, e.g. the counterparty’s name and tax identification number (NIP).
The current rules for recognising expenses related to the use of passenger cars in Poland differ significantly from the solutions applied in the SAP and SAP Concur service standard. There is a limit on the deduction of input tax and tax deductible costs in relation to car maintenance expenses (fuel, inspections, repairs, use of toll roads, washing and cosmetics) when the vehicle is intended for both taxed business activities and private use.
In SAP Concur, there are several solutions for partial deduction of VAT. The most commonly used variants are the following:
– a dedicated VAT code that triggers internal tax calculation in SAP Concur
There is a dedicated VAT code with an assigned mechanism for splitting the VAT amount into the deductible part and the non-deductible part. The code is selected by an employee directly when submitting an expense or attributed to a given expense type in the system configuration. This solution makes it possible to minimise modifications to SAP Concur but requires accuracy and knowledge about VAT deduction among all users who account for business trips. When entering the details of an invoice to be accounted for, the employee must select from a drop-down list the appropriate code pertinent to the % VAT deduction requirements.
– an additional dedicated field
Adding an extra ‘check box’ to be marked by users, thanks to which a dedicated VAT code is set and, consequently, 50% of VAT is deducted.
To make sure tax deductible costs related to car expenses are recognised correctly, an additional calculation of the amounts included on cost invoices is necessary so that 75% of the expenditure is recognised in tax deductible costs.
Through the use of an appropriate interface, SAP allows separation of the relevant amount of costs that can be classified as tax deductible on the General Ledger accounts. There are two ways to launch the cost splitting feature:
For tax purposes, under the general rule set out in Art. 11a(2) of the PIT Act and Art. 15(1) of the CIT Act, costs incurred in foreign currencies shall be converted into PLN at the average exchange rate announced by the National Bank of Poland (NBP) as of the last business day preceding the day of incurring the cost. It should be noted, however, that the provisions of the PIT and CIT Acts do not explicitly specify which day should be taken as the date of incurring a business travel expense.
Pursuant to the Regulation of the Minister of Labour and Social Policy of 29 January 2013 on Payments Due to an Employee of a State or Local Government Budgetary Unit in Relation to Business Travel (Journal Of Laws, item 167), it is the employee who is obliged to account for a business trip.
As per § 5 of the Regulation, an employee shall account for the costs of a business trip in Poland or abroad no later than within 14 days of the date the trip ends. The expenses related to the business trip are recognised in costs on the basis of the employee’s submission, and the appropriate exchange rate for converting these costs is the average National Bank of Poland exchange rate as of the day preceding the date the business trip is accounted for. This rate should also be used to convert undocumented expenses (daily allowances, lump-sum transport allowances).
To account for these costs, the employee encloses certain documents, in particular bills, invoices or tickets, to confirm particular expenses. This obligation does not apply to daily allowances and expenses covered by lump-sum transport allowances. If it is not possible to submit a document, the employee is required to make a written statement regarding the expense incurred and the reasons for the absence of documentation. In justified cases, the employee submits a written statement on circumstances affecting the right to daily allowances, lump-sum transport allowances and reimbursement of other travel costs or their amount.
Hence, the average National Bank of Poland (NBP) exchange rate applicable to the conversion of a daily allowance is the rate as of the day preceding the day the employee submits business travel expenses.
The SAP Concur system enables automatic retrieval of the table of exchange rates announced by the National Bank of Poland (NBP). A modification in SAP Concur is usually applied in order to convert daily allowances at the rate relevant to the day of accounting for a business trip.
When employees use company credit cards to pay for employee expenses, there are certain challenges related to accurate accounting for such payments, especially when it comes to foreign currency expenses. In the SAP Concur standard, it is possible to link cost documents to credit card payments. This attribution can be done by the employee directly in the system. The expenses are converted into PLN at the exchange rate used for the credit card payment. This solution speeds up the settlement process from the employee’s perspective, but it causes problems related to accounting calculations.
Costs incurred in foreign currencies are converted into PLN at the average exchange rate announced by the National Bank of Poland (NBP) as of the last business day preceding the date of incurring the cost. Generally, it is assumed to be the average exchange rate of the National Bank of Poland (NBP) as of the last business day preceding the invoice issue date. Exchange rate differences determined in accordance with Art. 15a of the CIT Act, arise, i.a., when the value of the cost incurred in a foreign currency, after its conversion into PLN at the average exchange rate announced by the National Bank of Poland (NBP), differs from the value of this cost as of the day of payment, converted at the exchange rate actually used on that day. In practice, these are exchange rate differences arising from the settlement of payments.
In order to correctly account for foreign currency expenses, it is necessary to modify the process of the conversion of amounts in foreign currencies. Additionally, to enable proper identification of the amounts of expenses submitted by employees, it is vital to configure the import of additional fields in SAP Concur that record the original amounts in a given currency.
Despite the numerous challenges and the need to modify the system, there are multiple benefits of implementing employee expense management solutions. First of all, it becomes possible to access documents in electronic form and track the approval process for business travel and other expenses. Such capabilities are appreciated not only by employees but also by accountants, who can easily and quickly communicate with employees and have access to information at any time.
Author: Katarzyna Opalko, Accounting Manager at MDDP Outsourcing.