Nikolai Bogdanovich, Head of Sales at ACBaltica
If your company operates across states or even borders, you already know tax compliance isn’t just paperwork. It’s a constant game of rules, exceptions, forms, and deadlines that gets trickier the bigger and faster you grow. Federal regulations, state-specific quirks, nexus rules changing with remote work – it adds up fast.
That’s why making tax compliance easier (and cleaner) is so crucial for many finance and IT teams. The good news is that if you’re already running SAP S/4HANA Public Cloud, you’ve got a system that’s built to handle complexity. And with the help of Avalara AvaTax, you can, in turn, automate and simplify the tax aspect – accurately, quickly, and without mess.
We’ve dealt with SAP and Avalara integration, and our experience might be interesting for you. Let’s take a closer look at how this works, what it offers, and why it’s worth considering.
We’ve dealt with SAP and Avalara integration, and our experience might be interesting for you. Let’s take a closer look at how this works, what it offers, and why it’s worth considering.
U.S. business tax compliance challenges
Doing business in the U.S. means playing by a lot of tax rules, and they don’t exactly come with a quick-start guide. It’s not just about federal regulations. Every state (and often every city) has its own logic, its own rates, and its own deadlines. And they don’t always line up.
It gets even messier once you start growing: crossing state lines, hiring remote teams, and handling cross-border operations.
Here's the shortlist of the challenges:
It gets even messier once you start growing: crossing state lines, hiring remote teams, and handling cross-border operations.
Here's the shortlist of the challenges:
Complexity of the federal tax code
The Internal Revenue Code (IRC) contains intricate rules on deductions, credits, depreciation, and income classification. It may lead to businesses struggling with the correct classification of income, selecting the right depreciation methods, and properly using business credits.
Multi-state tax compliance
State and local tax laws often vary drastically. As a result, companies operating across states must determine nexus in each state, navigate differing sales tax, income tax, and franchise tax rules, and file multiple returns with inconsistent deadlines and formats.
Nexus and remote work
The rise of remote work has blurred lines around the state tax nexus, so organizations may unintentionally create tax obligations in new jurisdictions.
International tax reporting
U.S. multinational companies face extensive international tax rules, which include compliance with lots of complex things such as FATCA, FBAR, and Form 5471/5472 filings, as well as dealing with transfer pricing documentation.
How can the SAP-Avalara integration help you?
SAP S/4HANA Public Cloud knows your business. It’s the engine that powers your core processes, touches every part of your operation, and handles massive volumes of data without blinking.
But it doesn’t provide smart tax automation out of the box.
That’s where Avalara comes in. AvaTax is built for one thing: calculating and managing tax properly, in real time, and across all the places you do business. It links directly to S/4HANA Public Cloud. No middle layers, no custom bridge, just a native integration that works.
Set it up once, and the data flows back and forth like it was always meant to.
Here are the main benefits of the integration:
But it doesn’t provide smart tax automation out of the box.
That’s where Avalara comes in. AvaTax is built for one thing: calculating and managing tax properly, in real time, and across all the places you do business. It links directly to S/4HANA Public Cloud. No middle layers, no custom bridge, just a native integration that works.
Set it up once, and the data flows back and forth like it was always meant to.
Here are the main benefits of the integration:
Direct integration
Integration between S/4HANA Public Cloud and AvaTax is smooth and seamless, as they have a prebuilt direct connection, so you can use it simply out of the box. No middleware or custom development is needed to get it to work, and data flows securely, quickly, and directly between systems.
Accurate and fast tax calculation
S/4HANA Public Cloud sends data to AvaTax. It, in turn, conducts tax calculation and then brings the tax total back. Everything happens quickly and automatically. With this, you can have your taxes calculated without hiring more people or adding more burden to both the finance department and the IT team.
Different tax rates for different cases
Every jurisdiction varies, and many have unique rules and rates based on a variety of factors. And these are not always obvious and intuitive. AvaTax knows the proper rules and calculates accordingly, considering all possible important variables and a jurisdiction’s features.
Nexus obligations check
In addition to the above, AvaTax is also capable of informing you when you are liable for sales tax in jurisdictions beyond the original one. Thanks to a convenient map view mode, you can effortlessly check out where you currently have to file and where you’re just approaching thresholds.
Returns integrated
With Avalara, you can pull everything into one view: review your full tax liability across all jurisdictions and file returns without jumping between systems. This means you can handle monthly, quarterly, or yearly returns smoothly, without chasing deadlines.
Support at a global scale
Even if your company operates in different countries with diverse tax laws, integrating Avalara with your SAP ecosystem will help you keep everything under control, as the tool also offers international tax-related capabilities.
Always updated
Tax rules can change quickly. To keep you in step with changing rules, AvaTax updates itself regularly, so your rates stay accurate without extra effort.
Proper security
Both SAP and Avalara follow strict security rules to ensure their customer data is safe and constantly available.
How does SAP and Avalara integration work day-to-day?
Just to give you a better view of how it would work, here’s an example of how the SAP and Avalara integration is supposed to run in real life:
1. A client is added in SAP. AvaTax assigns it a tax jurisdiction code based on the main address.
2. A sales order is created in SAP.
3. The ship-to address, item types, and pricing are sent to AvaTax.
4. AvaTax gets to work instantly. It looks at what’s being sold, where it’s headed, and what tax rules apply in that area.
5. The solution conducts calculations.
6. It then returns the tax total back to SAP in real time.
No manual lookups, no extra screens, and no spreadsheet patchwork. In fact, the end user will barely notice. On the other hand, the finance team will indeed notice because they’re not fixing tax errors post-invoice anymore.
It all just flows – clean, quick, and correct.
1. A client is added in SAP. AvaTax assigns it a tax jurisdiction code based on the main address.
2. A sales order is created in SAP.
3. The ship-to address, item types, and pricing are sent to AvaTax.
4. AvaTax gets to work instantly. It looks at what’s being sold, where it’s headed, and what tax rules apply in that area.
5. The solution conducts calculations.
6. It then returns the tax total back to SAP in real time.
No manual lookups, no extra screens, and no spreadsheet patchwork. In fact, the end user will barely notice. On the other hand, the finance team will indeed notice because they’re not fixing tax errors post-invoice anymore.
It all just flows – clean, quick, and correct.
Conclusion
No one likes spending extra hours wrestling with tax rates, missed filings, or manual returns. And you don’t have to.
With SAP and Avalara integration, you get a smoother process, fewer mistakes, and a system that keeps up with the rules (even when they change quickly). It’s not just a clever tech move; it’s a way to take one more thing off your plate, with confidence.
And if you’re wondering how to make it all work in your setup, that’s where we come in.
With SAP and Avalara integration, you get a smoother process, fewer mistakes, and a system that keeps up with the rules (even when they change quickly). It’s not just a clever tech move; it’s a way to take one more thing off your plate, with confidence.
And if you’re wondering how to make it all work in your setup, that’s where we come in.
Why choose ACBaltica for SAP S/4HANA-Avalara integration?
Experience
Here at ACBaltica, we have real experience in implementing integration between SAP and Avalara, so we know how to do it right, meeting the highest standards.
Certified specialists
Our specialists are not only experienced but also certified by SAP itself, meaning their skills and knowledge are recognized by the vendor.
Overall expertise with SAP
All in all, our company has more than 20 years of experience in the SAP domain with dozens of projects behind its back. Broad knowledge of best practices and industry standards is what helps us to successfully conduct one project after another.
Flexibility and scalability
We offer a personalized approach to every customer to ensure that their unique challenges are faced and their needs met.
Frequently asked questions about S/4HANA-Avalara integration
Is integration between SAP and Avalara only for big companies?
Not really. The beauty of it is that it scales. Whether you're handling a few hundred invoices a month or operating in 20+ states, the tool adapts. If your SAP system is up and running, AvaTax is ready to go.
Do I need any custom development to make this SAP-Avalara integration work?
Not at all. The integration is already here, as SAP and Avalara have a prebuilt connector, so there is no need to build middleware or reinvent anything.
What about edge cases like weird tax rules, niche states, and one-off situations?
That’s exactly why Avalara exists. It keeps track of all that, so you don’t have to. From soda taxes in Illinois to software licenses in Pennsylvania, it knows what applies, where, and when.
What’s ACBaltica’s role in all this?
We help make it real. From assessment to go-live, we’re your implementation partner. We’ve done this before, and we know how to make tools work for your setup.
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