VAT refunds

How to book VAT refunds?

VAT payable

The ususal state of affairs is, that a VAT submission results in a nett amount to pay to the Belastingdienst, booked at account Accounts payable. This is called:

• VAT payment
• VAT payable
• BTW-betaling.

The exceptional case

However, in the (hopefully) exceptional situation of a VAT refund or BTW-teruggave, how to book the resulting amount? At Accounts receivable, or as a negative amount at Accounts payable?

Accounts payable

where you occasionally receive a net amount concerning VAT (i.e., a VAT refund), you should book that as a negative amount at "accounts payable" rather than "accounts receivable":

• Consistency with VAT Payments: Since your regular VAT obligations are booked to "accounts payable," it makes sense to record any VAT refunds (negative VAT) in the same account. This keeps all VAT-related transactions centralized and makes it easier to reconcile your VAT account
• Accurate Reflection of Liability: A VAT refund effectively reduces your liability to the tax authorities. Recording it as a negative amount in "accounts payable" accurately reflects this reduction in your liabilities.