Bookkeeping & VAT

Around bookkeeping, handling VAT seems to be about the most complex thing for me. Let's fix that.

Issues

It's now the end of March and I need to do the submission over February. I hoped that there are some figures that I just need to copy to do the submission. Unfortunately, I run into the following issues:

• Op sheet All kan ik de getallen niet zomaar overnemen, want daar staan ook al de getallen over (een deel van) maart vermeld
• Op sheet Februari kan ik de getallen over februari zien, maar niet of er een correctie over eerdere aangiftes nodig is - Dat zou min-of-meer automatisch moeten gaan
• I need a place where the running totals up to the relevant month are shown. That seems like a different kind of entity than what I currently have (months, all, opening balance, closing balance).

Starting points

These are the thing I know for sure:

Account 'VAT Payed & to get back'

• I need for sure a bookkeeping account (boekhoudrekening) called VAT pretax (BTW: Voorbelasting) and a account VAT due (BTW: Verschuldigd)
• I don't need separate accounts for low/high VAT rates and currently, I don't need separate accounts for payed foreign VAT
• I need the two separate accounts pretax and due, rather than one account that maintains the nett amount due, for I need to state both amounts separately to the Belastingdienst in my monthly VAT submissions.

These are balance accounts. They have no bearing on the income statement.

Disbursing VAT is normal

When a business is having revenue and generating a profit, there will usually be a nett VAT payment, not a nett reception.

Of course, there can be exceptions. One example is an artist whom I know: Her costs are local, but her customers are all outside the EU hence she invoices with 0% VAT. The end result: She always gets VAT back (or 0), but never has VAT due to the Belastingdienst.

Accounts 'VAT Invoiced - low rate' & 'VAT invoiced - high rate'

I'm sure I need these two accounts, for the Belastingdienst wants to know these figures separately.

Example

Mutations

A company sells for € 1.000 (ex. high VAT rate):

* Revenue (high rate):              € 1.000
* VAT invoiced (high rate):         €   210
* Accounts receivable:      € 1.210

The company also buys for € 500 (ex. low VAT rate) and € 250 (ex. high VAT rate):

* Inventory:               € 500
* VAT payed & to get back: € 105
* Accounts payable:              € 605

and

* Inventory:               € 250
* VAT payed & to get back: €  22,50
* Accounts payable:                  € 272,50

Resulting balance sheet

* Accounts receivable:      € 1.210
* Inventory                 €   750
* VAT payed & to get back:  €   127,50
* VAT invoiced (high rate):            € 210
* Accounts payable                     € 877,50
* ----------------------------------------------
* Subtotal:                 € 2.087,50 € 1.087,50
* Equity = 
  assets - liabilities =
  € 2.087.5 - € 1.087,5 =              € 1.000
* ----------------------------------------------
* Subtotal:                 € 2.087,50 € 2.087,50

VAT submission

The figures for the VAT submission, can easily be copied from the balance sheet above. In total, € 82,50 need to be payed.

How to incorporate VAT submission?

Additional account 'BTW payed related to VAT fillings'?

I used to have a separate bookkeeping account called BTW payed related to VAT fillings, but also a separate column with nett figures, called Saldo: BTW to be payed over this period. From there it got quite messy, especially when errors were found in VAT submissions that later needed to be corrected.

Without this additional column?

Maybe it's better to not have this additional column, and just update the accounts mentioned before upon VAT submission?

• That way, errors will automatically appear without some exotic mathematics
• When there is a year that the company should get a nett reimbursement of VAT, the number appears on the right side of the balance: When there is only one nett column, it would logically be about disbursement of VAT. But in the unusual situation that the company actually gets VAT back, there will be a negative number here, rather than a positive number on the other side of the balance
• With a separate account for payments VAT, you need an additional mechanism to subtract thes payments from the accrued outstanding VAT disbursements. Otherwise they just pile up and you get a bigger and bigger balance sheet
• KISS.