Balance sheet & VAT

Both at the opening balance and closing balance of a year, some VAT related stuff is likely to be included. Let's figure out how to do that.

Context:

VAT is submitted each month, for the previous month
VAT submission over December has to be done before the end of January the next year
At the end of the year, this upcoming VAT submission over December, has to be included on the closing balance of that year
At the beginning of the next year, this same VAT submission has to be included - It's actually the same information, nicely reducing the complexity of the issue.

What information?

See the articles about VAT on this wiki for details about what information is exactly needed. This is an impression of the specific information that is needed for the businesses that I am involved with:

Domestic achievements - 21% - revenue
Domestic achievements - 21% - VAT due
Domestic achievements - 0% - Revenue
Purchases - non-EU - revenue
Purchases - non-EU - VAT due
Purchases - EU - Revenue
Purchases - EU - VAT due
Pretax NL
Pretax EU
Pretax non-EU.

Details:

Although this would be about the submission over December, these figures are the nett value of the two columns that make up each of these accounts. In theory, this would only be the mutations over December, but corrections over previous periods, should be included
The moment the submission has been done, the corresponding accounts above get subtracted with the submitted accounts, with Accounts payable as counter account
Note that not all fields above, are actually bookkeeping accounts. See Balance sheet for suggestions about how to incorporate the non-account information.

Opening balance

The opening balance for a given year is easy, because it must be the same as the closing balance of the previous year:

All VAT-related info is included on this one line in an opening balance

Accounts

A VAT submission involves more information than what is found on traditional bookkeeping accounts. However, here we only want to know the bookkeeping-account-stuff.

It's only these 6 accounts, for the business that I do bookkeeping for - The exact same accounts as you can see in the screenshot above.

Code	Account (EN)	Account (NL)	Notes	Account kind
1a2	VAT Due NL - 21%	Verschuldige BTW NL - 21%	VAT that the business collected from invoicing its customers	Balance-credit This is a form of debt - vreemd vermogen
4a2	VAT Due Non-EU	Verschuldigde BTW non-EU	Because of the 'VAT dance', VAT incurred through purchases, also have to be filed as VAT Due, hence this account	Balance-credit This is a form of debt - vreemd vermogen
4b2	VAT Due EU (outside NL)	Verschuldigde BTW EU (buiten NL)	Because of the 'VAT dance', VAT incurred through purchases, also have to be filed as VAT Due, hence this account	Balance-credit This is a form of debt - vreemd vermogen
5b1	VAT Pretax NL	Voorbelasting NL	Domestically incurred pretax (when the company is buying stuff/services)	Balance-debit Some resources have been used to pay for this
5b2	VAT Pretax EU	Voorbelasting EU	Pretax incurred through purchases within the EU (but outside NL). This is usually 'artifically created' through the 'VAT dance' when reverse VAT applies - Discussed elsewhere	Balance-debit Some resources have been used to pay for this
5b3	VAT Pretax Non-EU	Voorbelasting non-EU	Pretax incurred through purchases outside EU. This is usually 'artifically created' through the 'VAT dance' discussed elsewhere. I'm not sure if the term reverse VAT applies, as that seems an EU-specific concept	Balance-debit Some resources have been used to pay for this

This number of 6 accounts isn't chiseled in stone, though. One easy way to get to 7: When the art business sells original art works domestically: That would include post 1b2 - Low VAT rate.

Why this looks so weird

These filings are terrible non-intuitive, for various reasons:

Code	Account (EN)	Account (NL)	Notes
'VAT dance'	What I dub 'VAT Dance' relates to purchases from outside NL. They are assumed to be free of VAT. Subsequently, You have to figure out what the VAT rate would be if it was purchased domestically (usually 21% - no rocket science involved here). Subsequently, these figures are booked both as VAT Due and VAT Pretax, for both EU and non-EU That's why you end up with 4a2 and 4b2. They usually contain the same figures as 5b3 and 5b2
Pretax EU/non-EU is not really asked	On a VAT submission, there is just one post VAT pretax. It doesn't have to be specified whether this is domestically incurred, or outside through the VAT dance (Belastingdienst always assumes that sales from outside NL are without VAT). On the balance sheet, I could have just one account VAT Pretax. However, I prefer to keep them as three accounts, so I can track them individually, which comes handy when inevitably, corrections need to be made
Sales against 0% VAT is... 0	There is no account for tracking VAT Due for domestic sales that the company did against 0%, because 0% of whatever is € 0 Yes: The sales amount has to be submitted, but that's not an bookkeeping account - Hence not relevant here.

Notes

The date is the date on which the actual submission was done. I think Jan. 1 would make more sense, or Dec. 31. Maybe this was when I changed from an external bookkeeping service to DIY and I couldn't easily refer to an existing closing balance of the previous year
These amounts have to be the exact amounts as on the closing balance of the previous year, no matter how correct or wrong they are - Fixing such errors, is not something to do at the opening balance
Like mentioned at Balance sheet, lines on a balance sheet usually don't balance, as is the case here. Hence the check columns contain -- to make it clear that the checks aren't missing, but are purposely not there
This line only contains VAT-related accounts, and not e.g., revenue-related accounts - Quite intuitive.

Closing balance

How

It seems obvious: The VAT entries on the closing balance for a given year, are based on the VAT submission(s) that have not yet been submitted. In my case, this is the upcoming submission over December, which is typically filed near the end of January.

However, it is actually more complicated than that: Usually, the annual accounts over a given year, are compiled some time after the VAT submission over December has been done. Changes are, that by that time, some errors and corrections have been incorporated in the administration, and the 'historical' VAT submission over December, isn't accurate anymore. It is the 'actual' VAT situation that has to be included.

What

The VAT-related posts on the closing balance, are the posts that are about to be submitted - It doesn't get more complicated than that. I only don't know how to easily formulate this. Just have a look at any VAT lines at an opening or closing balance.

How - specifically

How to retrieve the actual numbers? Where to find them?

That depends on your specific setup. Since the administration over 2022, I use a VAT ledger (BTW-boek) that is a separate spreadsheet file, separate from the rest of the administration that consists mostly of the general ledger + balances. The reason for having this in a separate file: To be able to have both files open side-by-side.

Anyhow, for each month there is a line with the running totals for all mutations up to and including that month. The line is called to submit and it is the actual situation
Just copy the figures from that line to the closing balance.

This is incorrect: The closing balance should contain the 'actual' or 'up-to-date' VAT figures. Not what has been submitted (in this case, these figures unfortunately, are not identical)

This is correct: The closing balance contains the 'actual' or 'up-to-date' VAT figures, copied from the VAT ledger. Note that these involves different posts than for an actuall submission. E.g.: 1a2a instead of 1a2b (submitted). Also item 5g. nett to pay doesn't make sense here, as this is not a submission. And lastly: Do these figures look strange? They surely do: It turns out that over the year, I payed too much to the Belastingdienst, hence I get money back :)

Balance sheet & VAT

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