Microsoft is updating its Dynamics ERP suites to accommodate changes in Europe's VAT law that take effect next year.

Starting 1 January, business will have to report the sale to other companies within the EU of not only goods but also services, which means their ERP systems will have to be capable of delivering that information. According to the EU, business-to-business suppliers of services will be taxed based on where the customer is located rather than the where the supplier is.

Microsoft said the layout of the new tax report is different for each of the 27 countries in the EU.

The updates will upgrade Dynamics ERP systems, although Microsoft said customers need to subscribe to its Business Ready Enhancement Plan. The plan entitles subscribers to software upgrades for tax changes, among other features. Customers also must be on a still-supported version of Dynamics ERP.

The updates are for Dynamics AX, GP and NAV that support VAT 2010 within the core application, Microsoft said. The company will release further updates when other EU member countries specify more local details about the tax changes.