VAT in down payments received and paid
Question 1: I received a down payment (prepayment) from the customer, and SAP generated a posting
Dr Bank 118
Cr Customer Down Payment 100
Cr Output VAT 18
Why does the system behave the wrong way? It should be
Dr Bank 118
Cr Customer Down Payment 118
Cr Output VAT 18
Dr VAT from down payments received 18
Answer: The system will use a special GL account "VAT from down payments" when several prerequisites are met:Customer line item has Special GL indicator of "down payment" type.
Check this in transactions OBXR.
 Reconciliation account for the customer down payment should have tax category +B. Alternative GL account is defined in the same transaction OBXR. Tax category of GL account can be checked in the transaction FS00.Postings should contain tax code of an "Output tax" category. This can be checked in transaction FTXP."Output VAT" GL account number is set up in tax code (the same transaction FTXP)."VAT from down payment received" GL account number is set up in transaction code OBXB for MVA transaction. You can specify the same clearing account for all down payments, or split them using the clearing account identifications. If you want to use the split functionality, please tick the "Output tax clearing" checkbox in the rules for MVA transaction. Then, you can specify different clearing accounts for different identifications in transaction OBXB. These identifications are assigned to Special GL indicators in transaction OBXR.
Question 2: I pay a down payment (prepayment) to the vendor and SAP generates posting
Cr Bank 118
Dr Vendor down payment 100
Dr Input VAT 18
Why does system behaves itself the wrong way? It should be
Cr Bank 118
Dr Vendor down payment 118
Dr Input VAT 18
Cr VAT from down payments paid 18 
Answer: The system will use the special GL account "VAT from down payments" when several prerequisites are met:Vendor line item has a Special GL indicator of "down payment" type. Check this in transactions OBYR.Reconciliation account for the vendor down payment should have tax category -B. Alternative GL account is defined in the same transaction OBYR. Tax category of GL account can be checked in transaction FS00.Postings should contain tax code of the "Input tax" category. This can be checked in transaction FTXP."Input VAT" GL account number is set up in tax code (the same transaction FTXP)."VAT from down payment paid" GL account number is set up in transaction code OBXB for VVA transaction. You can specify the same clearing account for all down payments, or split them using the clearing account identifications. If you want to use the split functionality, please tick the "Input tax clearing" checkbox in the rules for VVA transaction. Then, you can specify different clearing accounts for different identifications in transaction OBXB. These identifications are assigned to the Special GL indicators in transaction OBYR.