Most European countries have a sales tax system that allows recovery of tax on purchases. A recoverable purchase tax amount is one that you are allowed to offset against sales tax payable. Such tax amounts are tracked separately in the GL. They update the AP Tax Invoice or Credit Note account for the tax rate. For recoverable taxes, the tax point is normally invoice date.

You cannot offset a non-recoverable purchase tax amount against sales tax payable. Usually, such taxes are already included in the item cost. Purchasing transactions back-calculate the tax from the item amount, assuming you set up the supplier and tax rate records to support this.