Permanent establishment accounting with PE.ONE, based on SAP Business One
For companies with permanent establishments abroad: take PE-relevant postings from the group ERP, review them per establishment and post them locally. With the original document, review status and history for every posting.
init consulting AG developed PE.ONE together with Siemens AG. In a consultation we clarify how your source systems and establishments are connected.
What PE.ONE is and what it is for
PE.ONE is a solution from init consulting AG for the accounting of permanent establishments (PE). It runs as a module of its own in the SAP Business One client.
Postings originate in the group ERP, for example SAP ERP. From there, the PE-relevant postings are exported, imported centrally into a PE master database and distributed via mapping tables to a separate database for each establishment. Master data and original documents are added via web services.
In the country database, each line is posted either through a review process across three roles, semi-automatically or fully automatically. Conditions stored in PE.ONE determine which line takes which route.
- Product
- PE.ONE, init consulting AG
- Based on
- SAP Business One
- Developed with
- Siemens AG
- Data source
- Group ERP, e.g. SAP ERP; transfer as CSV
- Data storage
- PE master database and one database per establishment
- Additional data
- Master data and original documents via web service
- Processing
- Workspace process, semi-automatic, fully automatic
- Roles
- Commercial project manager, PE coordinator, local accountant
If the player does not load: open the video on YouTube.
Why Siemens runs its permanent establishments on SAP Business One
In the film, Siemens explains why the tax treatment of permanent establishments is complex and expensive, and why the choice fell on SAP Business One after a longer evaluation. Reasons mentioned include:
- one standard tool for all establishments worldwide
- less manual work collecting data from different sources
- a full overview from a tax compliance perspective
- head office data made usable for local GAAP requirements
Why permanent establishments abroad need accounting of their own
Anyone who runs a construction site, erects a plant or carries out a project on site abroad for a longer period quickly creates a permanent establishment there. Its result has to be determined in a traceable way – at home and in the country of operation.
Postings originate in the group ERP
Costs and revenues of a project abroad are posted in head office systems. For the establishment they have to be extracted and separated into onshore and offshore shares.
The data sits in several systems
Postings, supplier master data and documents such as invoices or travel documents are held in different places. Bringing them together by hand for every establishment costs time and overview.
Local rules apply in every country
Each establishment is subject to the tax and accounting law of its country. A group chart of accounts alone does not cover these requirements.
In Germany, the BsGaV requires an auxiliary calculation
Under section 3 BsGaV, an auxiliary calculation (Hilfs- und Nebenrechnung) has to be drawn up for each establishment at the start of the financial year, continued during the year and closed at its end – at the latest by the time the tax return is filed.
From the group ERP to the establishment's database
Postings are exported from the source system, imported centrally, enriched with master data and documents and distributed to the establishments.
Postings from the source system
- An export routine in the source system exports the PE-relevant postings.
- The postings undergo an onshore/offshore split, for example based on WBS elements. Records that are not PE-relevant are filtered out at this stage.
- The postings arrive as CSV files and are imported centrally into the PE master database.
- Mapping tables distribute them to the databases of the individual establishments.
Master data and documents via web service
- Supplier and customer master data are retrieved for the imported postings so that cost documents can be posted completely.
- Original documents and travel documents are retrieved from document management and assigned to the postings.
- An import tool controls the steps. They can be started individually or as one overall process; project master data is imported or updated separately.
Three routes from imported line to posting
Not every line needs the same depth of review. PE.ONE offers three processing routes that can be combined. Conditions stored in PE.ONE determine which line may be posted automatically and which has to be reviewed manually.
Workspace process
Review across three roles
- The commercial project manager groups data lines into a draft document, adjusts it or marks it as not PE-relevant.
- The PE coordinator reviews the draft and passes it on.
- The local accountant carries out the final tax and accounting check and posts it as a cost or revenue posting.
Semi-automatic
Posting after the first review
- The commercial project manager edits the draft document.
- The system then posts it directly.
- The basis is the system checks of PE.ONE and the standard SAP Business One logic for A/P invoices and journal entries.
Fully automatic
Posting directly after import
- The required assignments are transferred with the import, such as transaction type, PE project, cost account or subcontractor.
- The line is posted without further manual assessment.
- Suited to lines whose assignment is clearly defined.
What the people involved see in PE.ONE
PE.ONE appears as a module of its own in the SAP Business One main menu. Work is done in forms that behave like the rest of the client.
One workspace per role
Commercial project manager, PE coordinator and local accountant each have a workspace of their own. Simplified workspaces for semi-automatic posting come in addition.
Review status on the document
The draft shows whether it has been checked by the commercial project manager, the PE coordinator and the local accountant, each with date and user. A draft can be sent back to the previous stage.
Original document attached
The related invoice is attached to the draft and can be opened directly. Travel documents are retrieved from within the workspace.
Bulk processing
Several lines can be turned into drafts in one step; dates and items can be changed in bulk.
Draft history
The processing of a draft can be traced in a history. Locked drafts can be released again selectively.
Original data and additions
The imported original data remains visible. Missing lines can be added manually. Master data, mappings and reports are in the same module.
From the first conversation to the first establishment in operation
Siemens started with two pilot establishments, in Saudi Arabia and Egypt. A pilot is also what we suggest as a starting point.
Consultation
We clarify how many establishments you run in which countries, in which systems the postings originate and who reviews and posts today.
Define source systems and split
Together we define which characteristic makes a posting PE-relevant and how the onshore/offshore split is done, for example via WBS elements.
Set up mappings and conditions
Mapping tables, roles and the conditions for automatic posting are set up for each establishment.
Pilot
One or two establishments go live first. The experience feeds into setting up the others.
Rollout and support
Further establishments are connected. init consulting AG provides support and maintenance.
What PE.ONE does not do
A solution for permanent establishments touches tax law in several countries. So that it is clear what you can expect:
No tax advice
PE.ONE provides the accounting for each establishment. The tax assessment, for example whether a permanent establishment exists at all or how profits are to be attributed, remains with your tax department and your advisers.
No replacement for the group ERP
Postings continue to originate in the source system. PE.ONE takes over the PE-relevant postings and processes them further for the establishment.
No clean split without clean tagging
The onshore/offshore split requires postings in the source system to carry an evaluable characteristic, for example a WBS element. If it is missing, this has to be resolved before implementation.
Scope of the auxiliary calculation to be clarified case by case
Which components under section 3 (2) BsGaV have to be covered in your case – such as endowment capital or notional business income and expenses – and how PE.ONE supports this, we discuss in the consultation. This page deliberately makes no general statement on it.
Terms used on this page
- Permanent establishment
- Under section 12 of the German Fiscal Code (AO), any fixed place of business or facility that serves the activity of an enterprise. Abbreviated PE; in German Betriebsstätte.
- BsGaV
- German ordinance on the attribution of profits to permanent establishments (Betriebsstättengewinnaufteilungsverordnung). It governs the application of the arm's length principle to permanent establishments under section 1 (5) of the German Foreign Tax Act and applies to financial years beginning after 31 December 2014.
- Auxiliary calculation
- Calculation under section 3 BsGaV (Hilfs- und Nebenrechnung) that is drawn up for an establishment at the start of the financial year, continued and closed at its end. Its closing contains the establishment's result.
- Onshore/offshore split
- Separation of the postings of a project abroad into the share attributable to the establishment on site and the share outside it.
- WBS element
- Element of a work breakdown structure in SAP. It can serve as the characteristic for assigning postings to an establishment.
- PE master database
- Central database in PE.ONE into which all PE-relevant postings are imported before being distributed to the establishments.
- PE coordinator
- Role in PE.ONE that reviews the commercial project manager's draft document and passes it on to the local accountant.
Frequently asked questions on permanent establishment accounting with PE.ONE
What is PE.ONE?
PE.ONE is a solution from init consulting AG for the accounting of permanent establishments abroad. It is based on SAP Business One and runs there as a module of its own. It was developed together with Siemens AG.
Which companies is PE.ONE intended for?
For companies that carry out projects abroad and create permanent establishments there, for example when building plants. The postings originate in the group ERP and have to be extracted and posted locally for each establishment.
Where does PE.ONE get its postings from?
From the company's source systems, for example SAP ERP. An export routine exports the PE-relevant postings as CSV files after an onshore/offshore split. They are imported centrally and distributed via mapping tables to the databases of the establishments.
Does every posting have to be reviewed by hand?
No. Besides the workspace process with three review stages there is a semi-automatic and a fully automatic route. Conditions stored in PE.ONE determine which line may be posted automatically.
Who reviews and posts in the workspace process?
Three roles: the commercial project manager groups the lines into a draft document, the PE coordinator reviews it, and the local accountant checks it from a tax and accounting perspective and posts it. The review status is recorded on the document with date and user.
How do invoices and travel documents get into PE.ONE?
Via web service from document management. The documents are assigned to the imported postings and attached to the draft, where they can be opened directly.
Does PE.ONE produce the auxiliary calculation under the BsGaV?
PE.ONE keeps the accounting for each establishment and so provides a data basis. Which components your auxiliary calculation has to contain in your case, and how PE.ONE supports this, we clarify in the consultation. PE.ONE does not replace tax advice.
How is PE.ONE licensed?
init consulting AG is an OEM partner of SAP. This allows it to offer customers rental contracts as well. Which model suits your number of establishments and users, we discuss in the consultation.
Related pages
Discuss your permanent establishments with us
Bring along how many establishments you run in which countries, which systems the postings come from and who reviews and posts today. We show you how PE.ONE maps the route from the group ERP to local accounting.
Your contact
- Team
- PE.ONE
init consulting AG, Kösching, Germany - Phone
- +49 8456 2 78 04-0
- Address
- Ruppertswies 14, 85092 Kösching, Germany