Understanding Supply and Install in SAP

VAT in SAP often feels like a maze of exceptions, workarounds, and endless manual fixes. Our video series exposes the most common pitfalls.

What is Supply and Install?

Where a non-established supplier sells goods to a customer in another EU Member State, and those goods require installation in order for the customer to use them, this is referred to as a supply and install.
This is a mixed supply, consisting of both:
  • A goods element
  • A service element (installation)
The place of taxation for supply and install goods is the Member State in which those goods are installed. Ownership of the goods transfers to the customer only once the installation has been completed by the supplier.

Example

If we look at a typical scenario, a Belgian supplier delivers goods to a customer in another EU Member State and must also arrange for the installation of those goods. Once the installation is complete, the sale to the customer takes place. Under normal circumstances, this would involve a movement of goods from Belgium to another EU Member State, followed by a domestic sale.

The rules for supply and install differ. The place of taxation is where the goods are installed. As a result, there is no intra-community dispatch from the supplier and no EC Sales List reporting. Instead, once ownership transfers following installation, the transaction is treated as a domestic sale.

In summary:

  • No intra-community dispatch
  • No EC Sales List reporting
  • A domestic sale in the country of installation

Watch the Video: Supply and Install Explained

We explain the VAT treatment and implementation of Supply and Install
What is Supply and Install?

The video explains the VAT treatment of supply and install transactions and outlines the various factors that must be considered in this scenario.

Supply and Install and SAP

Understanding the VAT treatment is only part of the challenge. Implementing this within SAP introduces further complexity.

Simplification and Complexities

Simplification

Some Member States have introduced a simplification allowing the use of the extended reverse charge. This means:

  • The supplier does not charge output VAT
  • The customer accounts for both output and input VAT
  • The supplier may not need to be VAT registered in the installation country (if no other obligations exist)

Complexities

From the supplier’s perspective, understanding the correct treatment across jurisdictions can be difficult. It is necessary to determine:

  • Whether the transaction is a supply of goods or services
  • Whether VAT should be applied or a reverse charge applies

Where the transaction is treated as a service, the general rule applies. This means the place of taxation could be where the customer is established, which may differ from the Member State in which the goods are installed. This makes supply and install a complex area.

Find out More

How Meridian Tax Technology Manages Supply and Install in SAP

Understanding the VAT treatment is only part of the challenge. Implementing this within SAP introduces further complexity.
SAP does not provide specific functionality for supply and install.

VAT determination is carried out at a line-item level. While this is best practice, it creates limitations where both goods and installation lines exist within the same transaction.

Triggering Supply and Install Logic

Many organisations use specific triggers within SAP to recognise supply and install. These may include an order type, order reason, or item category. Meridian functionality allows these inputs to dynamically update VAT determination.

SAP is not fully equipped to handle all scenarios, often leading to manual intervention, increased risk, and inconsistent outcomes.

Meridian has developed practical, system-driven solutions to address these challenges—enabling accurate VAT determination within SAP and removing reliance on manual workarounds.

Download the Guide to Supply and Install in SAP

Our Guide explains what is Supply and Install in SAP and how to effectively manage the process.
  • What is Supply and Install
  • Considerations when using Supply and Install
  • Implementing Supply and Install in SAP
  • How Meridian enables you to automate the process
Download the Guide

Known VAT Issues in SAP

There are many known VAT issues in SAP including Supply and Install Flows, Domestic Reverse Charges, Cross Border Consignment Flows, Special VAT Regions. Toll Manufacturing, and many more. Our tax technology and VAT compliance experts are on hand to discuss these challenges with you, and advise how to automate many of the processes with Tax Technology.

Talk to our tax technology experts