Setting up country-based VAT mapping and multiple VAT rates
Use this guide to configure multiple VAT rates using ISO codes and country mapping, and to better understand how the AI Receipt Scanner interacts with that configuration during synchronization.
When an expense user submits a receipt, the AI Receipt Scanner reads the document and extracts both the country of purchase (via ISO country code) and the VAT/tax percentage. During synchronization to Business Central, Expense Management uses this information to look up the appropriate VAT Product Posting Group defined in Posting Setup – Country/Region VAT Mapping.
Located in Expense Posting Setup, this feature allows a single expense type automatically apply the correct VAT Product Posting Group, based on the country where the expense was incurred, and the VAT percentage detected by the AI Receipt Scanner.
Prerequisites
Before you can configure VAT Country Mapping, you must first ensure:
- The VAT/Tax Amount field is added to Configured Fields
- The Country/Region field is added to Configured Fields
- That relevant VAT Product Posting Groups exist in Business Central for each VAT rate you want to support (for example, VAT19, VAT7, NO VAT)
To verify or add the aforementioned fields:
Search for and select Configured Fields.
In the Field Code column of the table, confirm that the VAT amount and Country/Region are both present. If not, add them by typing or choosing from the list.
Note
This functionality requires that the VAT/Tax Amount and Country/Region fields are configured in Configured Fields. Without these fields enabled, automatic VAT rate matching does not work.
Configure the Expense Posting Setup for multiple VAT rates
For supporting multiple VAT rates without duplicate expense types, we recommend assigning a VAT Product Posting Group without VAT (for example, NO VAT) as the default on the Expense Posting Setup line. Then let the Country/Region VAT Mapping take over the actual rate assignment at sync time.
To configure the Expense Posting Setup:
Search
for and select Expense Posting Setup.Locate the posting setup line for the expense type you want to configure (for example, Meals).
In the VAT Product Posting Group field, assign a group that carries zero VAT (for example, NO VAT). This group acts as a fallback when no mapping matches.
{% hint style="note" %} Setting NO VAT as the default means the posting setup does not hard-code a rate. The correct rate is applied dynamically through Country/Region VAT Mapping, (However, it does not mean that VAT is never posted). {% endhint %}
Configure Country/Region VAT Mapping
You can define which VAT rates are available for a given country, and which VAT Product Posting Group corresponds to each rate on the Country/Region VAT Mapping page.
To configure Country/Region VAT Mapping:
- Search for and select Expense Posting Setup.
- Select the relevant line and click Country/Region VAT Mapping, (or navigate to it directly via search).
- For each country that requires its own specific VAT rate, add a line that includes the following:
- Country/Region Code — this is the ISO country code (for example, DE for Germany, or FR for France).
- No. of VAT Rates — specify the available rates for that country. For Germany for example, enter 19 and 7 as separate lines (which corresponds to 19% VAT and 7% VAT).
- VAT Product Posting Group — this links each rate to the corresponding posting group (for example, '19' links to VAT19, and '7' links to VAT7).
Example scenario
In this scenario, we have a meal receipt from Germany with two VAT rates on the same receipt.
Based on the example information from step 3, Expense Management syncs an expense from a German receipt where the AI Receipt Scanner detected 19% VAT. It matches the country code DE, the VAT percentage rate of 19, and automatically assigns it to the VAT19 posting group (regardless of which expense type the user selected).
| Country/Region Code | VAT Rate (%) | VAT Product Posting Group |
|---|---|---|
| DE | 19 | VAT19 |
| DE | 7 | VAT7 |
With this setup, this means a single Meals expense type covers both standard and reduced VAT rates for Germany. The AI Receipt Scanner detects the rate printed on the receipt, and Business Central automatically applies the correct posting group.
How the AI Receipt Scanner works with VAT rates
The AI Receipt Scanner analyzes the uploaded receipt image and attempts to extract:
- Total amount
- VAT/tax amount (one or more)
- VAT percentage(s)
- Country of purchase (using ISO country codes from the receipt or the vendor address)
When multiple VAT percentages appear on a single receipt (for example, a hotel bill showing accommodation at 7% and a restaurant charge at 19%), the scanner automatically splits the expense into separate lines, one for each detected rate.
During synchronization in Business Central
The detected tax percentage is compared against the rates defined in Country/Region VAT Mapping for the expense's Country/Region Code.
- If the system finds a match, it applies the corresponding VAT Product Posting Group to that expense line.
- If the system doesn't find a match, it uses the default VAT Product Posting Group from the Expense Posting Setup line as a fallback.
{% hint style="important" %} ISO code-based country detection improves accuracy when receipts contain country information in standardized formats. Ensure the Country/Region configured field is active so the data flows correctly from the Expense App or Expense Portal into Business Central. {% endhint %}
Reduced duplicate expense types
A key benefit of this setup is the reduction of redundant entries in the Expense Posting Setup. Where a company may previously have needed to enter:
- Meals – 7% VAT
- Meals – 19% VAT
- Hotels – 7% VAT
- Hotels – 19% VAT
With VAT Country Mapping, the setup is simplified to:
- Meals (NO VAT default, rates resolved via mapping)
- Hotels (NO VAT default, rates resolved via mapping)
The mapping table handles the rate differentiation, which means expense users experience a shorter, cleaner, list of expense types to choose from.
Related information
Setting up VAT/sales tax input from expense users
Capturing expense data using the AI Receipt Scanner
Setting up expense types
Intelligent VAT recognition and country-based VAT mapping