Bookkeeping & VAT
Around bookkeeping, handling VAT seems to be about the most complex thing for me. Let's fix that.
Starting points
These are the thing I know for sure:
Account 'VAT: Pretax' - 'BTW Voorbelasting'
- 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, as (so far) I always charge with high VAT tariff. With other words, the amounts relating to low VAT rate are always 0. I don't need accounts for just holding those 0s.
- I don't need separate accounts for payed foreign VAT
- I need both 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 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.
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.