1 Topic by demille (edited by demille 02/25/2013 06:38:38 pm)

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Topic: EU VAT from jan 2013

EU regulations concerning VAT tax have been changed from 1  January 2013.

Before 2013 VAT tax for purchases was deductible from the moment the invoice was received and booked, for Sales VAT tax was payable from the moment the service or goods were delivered, invoiced or not.

From 2013 the purchases must also be delivered and/or paid for before VAT Tax becomes withdraw-able and may be booked. For sales the VAT tax becomes claimable and may be booked at the moment the goods are invoiced and delivered or have been paid for.
Invoices must be provided before the 15é day of the month following the month the VAT tax became claimable.
For EU deliveries the receiver of the goods or services must make a document and declare the VAT tax when the provider has not provided an invoice within these therms.

All invoices must show the date of invoicing and the date when the VAT tax became claimable also when these dates are the same.
Invoices can be booked only after the goods or services are paid for or delivered.

As Frontaccounting is not EU VAT tax friendly this will not make it easier to automatise the process.

Any proposals?

  • Registered: 12/25/2007
  • Posts: 2,448

Re: EU VAT from jan 2013

All invoices must show the date of invoicing and the date when the VAT tax became claimable also when these dates are the same.

There is lack of separate VAT date in purchase invoice, it could be added, but what about the situation, when VAT date and invoice date are not the same?

Currently in FA all GL posting related to some document (e.g. purchase invoice) are posted on the same (document) date. I'm not sure whether posting VAT and net amounts on two different dates would be correct from accounting point of view? In other words: can we have single AR/AP subledger document to be posted on two different days in general ledger?

Janusz

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

itronics wrote:

All invoices must show the date of invoicing and the date when the VAT tax became claimable also when these dates are the same.

There is lack of separate VAT date in purchase invoice, it could be added, but what about the situation, when VAT date and invoice date are not the same?

Currently in FA all GL posting related to some document (e.g. purchase invoice) are posted on the same (document) date. I'm not sure whether posting VAT and net amounts on two different dates would be correct from accounting point of view? In other words: can we have single AR/AP subledger document to be posted on two different days in general ledger?

Janusz

In practice invoices are made and/or booked after the VAT tax becomes claimable, so the invoice date is always later or the same as VAT tax date. GL accounts may be booked when the invoice can be booked. The VAT date is de date goods or services are delivered or recieved  or the date they are paid for as shown on the bank summary; So, when the goods are paid in advance the VATtax date is de date the payment shows on the bank summary.
AR/AP can only be booked when the invoice is booked because these are, together with the bank summary's, the legal documents to prove transactions.
wich prove the booked transactions.

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

For transactions between EU countries for VAT tax to be claimable the VAT number on the invoice must be a legal VAT number. Each country has its own VAT number combination. This number must be verified by the receiver of the invoice before VAT tax becomes claimable. A first verification is that the number corresponds with the country of origin of the supplier. Al suppliers and costumers forms should have a  country code entrance possibility which makes it possible to know if  VAT-number entered corresponds with the  country of origin.  Or maybe this can be done by making an address field for the code, for example BE for Belgium.
http://en.wikipedia.org/wiki/VAT_identification_number.
Then this number must be verified as an EU country registered number. A possibility is to check on the EU website: http://ec.europa.eu/taxation_customs/vies/vatRequest.html?locale=en
To automatise this I think databases must be added. Help!

  • Registered: 12/25/2007
  • Posts: 2,448

Re: EU VAT from jan 2013

While all the EU countries have harmonized tax regulations, details of the regulations differ. For example in Poland the general rule  binding VAT effective date with the goods delivery (optionally deferred to the sales VAT invoice date) is not applicable to some services. Example here are 'continues services' (like electric energy supply, telececom services etc), for which VAT effective date is the date determined by payment terms (yes, this is payment term stated on invoice, even not real payment date!).

Anyway, I understand this is fully legal in your country to have single purchase invoice document booked in GL under two different dates, for net and VAT part of the invoice value?

Janusz

  • Registered: 12/25/2007
  • Posts: 2,448

Re: EU VAT from jan 2013

Regarding VAT numbers verification, this is currently not implemented in FA, however I agree it would be usefull. Anyway if you  use FA via internet, there is no need for any EU VAT numbers/formats database: there is online service available HERE where you can check VAT numbers status  at any time smile.
Janusz

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

itronics wrote:

While all the EU countries have harmonized tax regulations, details of the regulations differ. For example in Poland the general rule  binding VAT effective date with the goods delivery (optionally deferred to the sales VAT invoice date) is not applicable to some services. Example here are 'continues services' (like electric energy supply, telececom services etc), for which VAT effective date is the date determined by payment terms (yes, this is payment term stated on invoice, even not real payment date!).

Anyway, I understand this is fully legal in your country to have single purchase invoice document booked in GL under two different dates, for net and VAT part of the invoice value?

Janusz

These are EU rules and must be the same for all EU countries within the community. They where implemented from 01 jan 2013.
When for example the electric company sends each 3 months an invoice as advance on the yearly billing  they can do this only after the electricity for that period  was delivered, they may not send you an invoice any-more for an advance on the delivery of electricity. If they send you a bill ( not a legal invoice) for an advance on delivery they can only make an invoice and book it when you have paid the bill. The costumer has to wait for the legal invoice which he can book immediately because it was paid for even not delivered.
When the same invoice is not paid by the costumer  the electric company must book the invoice because they have delivered but the costumer may only book that part of the invoice that has been delivered in the taxable period. When the taxable period is also 3 month but the moths do not correspond, only for the corresponding period VAT-tax is claimable.

Booking the same invoice under two dates is forbidden. Invoices may be made and booked only when the VAT- tax becomes claimable because bookings may show only the claimable VAT and not the VAT you may be entitled to. A seller can make a legal invoice only when the goods or services where delivered or the costumer has already paid for them as shown on his bank-account. Purchases may be booked the moment  the legal invoice, with VAT-tax claimable date, arrived and the goods or services are received or have been really paid for, shown by the bank summary.  So the GL accounts may show the booking on the date the legal invoice is made. This is for the VAt-tax and for net it should be the same because the legal invoice with VAT tax claimable date is the only valuable document on which the bookings may be based.

When each country will implement these new rules on there own way, nothing will change.
For the moment the directions in Belgium are as stated above.
This is not easy writing and as I am Dutch speaking I hope my English is good enough.
Thanks for the reply.

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

itronics wrote:

Regarding VAT numbers verification, this is currently not implemented in FA, however I agree it would be usefull. Anyway if you  use FA via internet, there is no need for any EU VAT numbers/formats database: there is online service available HERE where you can check VAT numbers status  at any time smile.
Janusz

Thank you ,
I have mentioned that website in previous message.
Because VAT numbers for EU countries have not the same number of digits
errors are easily made; A database could help to prevent errors because the correct quantity of digits for that country must be entered to be accepted.

  • Registered: 12/25/2007
  • Posts: 2,448

Re: EU VAT from jan 2013

While the VAT regulations are harmonized across EU, still when new EU regulations appear there is some time to accomodate the changes to local law. Frankly the changes you described for some reason are not even disputted here in Poland (and we have end of February 2013 now!), and purchase invoices for continous services (e.g. for electricity supply) are claimable on the payment terms date.

As general accounting rules require booking expenses in related period, and VAT claimable date according to payment terms can be located in next period, single purchase invoice have to be booked in two different dates. So in effect you have two complimentary bookings made on two different dates, and they both are based on the same purchase invoice.

While described situation is specific to polish VAT regulations, this is only example, and similar problem you can find when basic document covers longer period (even if no VAT is involved).

Booking the same invoice under two dates is forbidden. Invoices may be made and booked only when the VAT- tax becomes claimable because bookings may show only the claimable VAT and not the VAT you may be entitled to.
(...)
This is for the VAt-tax and for net it should be the same because the legal invoice with VAT tax claimable date is the only valuable document on which the bookings may be based.

Ok, so how you would book e.g. rental when you are obliged to pay in advance for 3 periods. According to accounting rules you should book 1/3 of the rental value in every period, and you have only single invoice for the total amount?

If this is done on invoice date, the part of amount have to be rebooked to other periods on other dates via clearing account, so you effectively have 3 bookings to single base document (invoice).
Janusz

10 Reply by demille (edited by demille 03/01/2013 10:12:15 pm)

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

Rental of real estate is VAT exempt but the rent must show in the VAT declaration. Rental of equipment is 21% VAT in Belgium.
Based on the rental contract the rent is paid in advance for a period of 3 months. Once paid, the VAT claimable date will be the date the payment was received and an invoice must be made before the 15é of the following month. When the invoice is received the VAT tax can be booked for the paid period as shown on the invoice. When the rent was not paid for, invoice must be made for the consumed TAX- period and booked in this period. Invoice date and VAT-tax claimable date will be the same.

There is a subscription on a monthly magazine payable in advance each 3 months. The subscriber forgets to pay but because he is  a good costumer the next number was send to him. The VAT tax claimable date will be the date the magazine was send and the invoice for one magazine must be made before the 15é of next month. The invoice must be booked in the invoice date Tax period, As long the subscription was not paid for but magazines are send each month there will be an invoice each month. When the subscription was paid after the VATtax of the first month became claimable the next invoice will show the VAT-tax claimable date of the received payment.
This is how I implement the new Vat regulation.
In Belgium VAT declaration is before the 20é day of the month following the TAX period ( 1 or 3 month)

The above is for VAT tax declaration.
For income tax the normal accounting rules for your country apply.

Please comment.

  • Registered: 12/25/2007
  • Posts: 2,448

Re: EU VAT from jan 2013

Well, while all this is true, my question was more generic and not exactly related to VAT matters.

In the rental example I have considered only net charge value, which should be posted in 1/3 part in every period covered by invoice. When you will post all the 3 months rental charge at once, your GL can be considered not fair, as you have not included your rental charges in respective periods. Therefore my question was how you would solve the problem, if 'booking the same invoice under two dates is forbidden'.

Please abstract from the detais of the examples, and you will see the same situation regarding net and VAT values for single invoice. Just you need sepaarte VT date, because sometimes VAT date differs from transaction date, so you should post the two amounts on different dates.
How you would do it to be fair according to your local regulations?

Janusz

PS Sorry, english is not my native language too, anyway I hope the problem is more clear now.
J.

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

Normal rent is VAT exempt. No invoice is needed. The rental contract and payment are enough to proof the booking. In Belgium, small company's book the rent when paid. At the end of the year, during inventory, the month's not consumed must be transferred and booked to next year. For company's that have monthly vat declaration or company's who wants monthly results, the rent is booked in the month it is consumed. When rent is paid for 3 month's in advance, the total rent is booked on a waiting account, for example RENT X 3. Each month the rent for one month is booked from this account to the account AR or AP. During inventory non consumed months are booked to next year.
In Belgium VAT exempt sales must be declared on the VAT declaration because VAT tax is deductible in ratio to the VAT exempt turnover.

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

How to implement the VAT claimable date in FA?

  • Registered: 12/25/2007
  • Posts: 2,448

Re: EU VAT from jan 2013

Thanks for explanation.
Regarding VAT claimable date I guess there are changes needed in FA code to make it easier. In customized polish FA version, the VAT date is enterd separately in Purchase Invoice form. This cannot be added in 2.3.x FA version due to development policy, which forbid database scheme changes in minor releases. Will be fixed in 2.4. Before that I guess you can entry purchase invoice at invoice date, and rebook the VAT value via auxiliary account whenever it is  needed.

Janusz

  • From: Singapore, India, Chennai
  • Registered: 05/02/2009
  • Posts: 6,160

Re: EU VAT from jan 2013

Please synch the v2.4 with v2.3 for common file changes and gettext so we can now start dev 2.4 in right earnest.

apmuthu's Website

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

itronics wrote:

Thanks for explanation.
Regarding VAT claimable date I guess there are changes needed in FA code to make it easier. In customized polish FA version, the VAT date is enterd separately in Purchase Invoice form. This cannot be added in 2.3.x FA version due to development policy, which forbid database scheme changes in minor releases. Will be fixed in 2.4. Before that I guess you can entry purchase invoice at invoice date, and rebook the VAT value via auxiliary account whenever it is  needed.

Janusz

Sales invoices need a VAT claimable date possibility to make and print legal VAT invoices.
For purchases the invoice must carry the VAT tax claimable date to be used for VAT tax declaration. IF not the VAT-tax must be booked as an expense or on a waiting account until problem solved. In practice, payment will be made only for the VAT excluded amount.

Maybe thinking about an EU version of FA with automated VAT declaration ( also vat exempt amounts)  possibilities and EU legal Invoicing.
EU sales declaration and Yearly costumer declaration .

As I am new in FA I  am still surtching for a way to solf the VAT problem. I think  making all purchases o vat  and entering the VAT in an other line is the easiest way to solve the problem for the moment. I am now adapting the Belgian accounts to make it possible to tag them and try to get the totals I need for VAT declaration by the tagged  accounts reports.
Each month or 3 months, when the vat declaration is made and posted, the GL VAT-tax accounts must be booked to the VAT R/C account. Is there a possibility to make a standard booking wich includes all neccasary accounts for repetitive bookings?

  • Registered: 12/25/2007
  • Posts: 2,448

Re: EU VAT from jan 2013

Sales invoices need a VAT claimable date possibility to make and print legal VAT invoices.

I don't know local belgium regulations which are maybe the most strict in EU, but I have not found 'claimable VAT date' explicitly printed on any invoice issued in Poland, nor recieved form a couple of other EU countries. Yes, in most cases there is a sales date stated on the invoice, which serve as base date to audit the invoice was not issued to late. It is salesman responsibility to issue VAT invoice within allowed time after sales was made. Thereofore I guess FA sales process in current version covers some 95% of sale cases properly (excluding prepayments and intra-EU trade in current version).

Is there a possibility to make a standard booking wich includes all neccasary accounts for repetitive bookings?

Yes, you can use Quick Entries to define repetitive set of postings.
Janusz

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

http://ec.europa.eu/taxation_customs/taxation/vat/traders/invoicing_rules/index_en.htm


Second Directive on VAT Invoicing (Council Directive 2010/45/EU) and Explanatory Notes

The second Directive on VAT invoicing was adopted on 13 July 2010 and  its provisions shall be applied by Member States as from 1 January 2013.

It aims to promote and further simplify invoicing rules by removing existing burdens and barriers. It establishes equal treatment between paper and electronic invoices without increasing the administrative burden on paper invoices and has the aim to promote the uptake of e-invoicing by allowing freedom of choice regarding the invoicing method.

For a clear understanding of the main VAT invoicing rule changes as from 1 January 2013 a set of Explanatory Notespdf Choose translations of the previous link has been written in 21 languages.

  • Registered: 12/25/2007
  • Posts: 2,448

Re: EU VAT from jan 2013

Well, I'm not European Union law specialist, so I'm not sure how the EU directives are applied across various EU countries. As far as I know EU tax law is not applicable directly to companies, which have toso EU companies have to fullfil local requirements, which varies.

EU directives lay down certain end results that must be achieved in every Member State. National authorities have to adapt their laws to meet these goals, but are free to decide how to do so.

This is how EC see this matters (according to the page you have mentioned). Many things you consider mandatory, are not mandatory - at least in Poland - as of January 1th 2013.

Thank you anyway for pointing out all the concerns related to using FA in other EU countries. We wil try address them better in following FA relases.

Janusz

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

itronics wrote:

Well, I'm not European Union law specialist, so I'm not sure how the EU directives are applied across various EU countries. As far as I know EU tax law is not applicable directly to companies, which have toso EU companies have to fullfil local requirements, which varies.

EU directives lay down certain end results that must be achieved in every Member State. National authorities have to adapt their laws to meet these goals, but are free to decide how to do so.

This is how EC see this matters (according to the page you have mentioned). Many things you consider mandatory, are not mandatory - at least in Poland - as of January 1th 2013.

Thank you anyway for pointing out all the concerns related to using FA in other EU countries. We wil try address them better in following FA relases.

Janusz


As stipulated, EU member countries had to implement the new Vat rules in there national laws and implement them from 01 jan 2013. If Poland did not implement the new rules Polisch invoices are not legal documents for EU- Vat declarations and can not be used to claim VAT in other EU countries. In that case, the EU costumer must make a legal document for that invoice with VAT claimable date to claim paid VAT before the 15th of the month following the month the goods or services where received. As the received Polish invoice is not legal the EU costumer must always pay for the VAT before it becomes claimable by the self made legal document.

  • From: Poland
  • Registered: 10/15/2013
  • Posts: 1

Re: EU VAT from jan 2013

itronics wrote:

Regarding VAT numbers verification, this is currently not implemented in FA, however I agree it would be usefull. Anyway if you  use FA via internet, there is no need for any EU VAT numbers/formats database: there is online service available HERE where you can check VAT numbers status  at any time smile.
Janusz

Here is a similar application but with the ability to verify a large amount of numbers in one cycle.
VIES verification
For many, this can be very helpful.

  • From: Belgium, Wallonia
  • Registered: 01/21/2013
  • Posts: 36

Re: EU VAT from jan 2013

mmllmm wrote:
itronics wrote:

Regarding VAT numbers verification, this is currently not implemented in FA, however I agree it would be usefull. Anyway if you  use FA via internet, there is no need for any EU VAT numbers/formats database: there is online service available HERE where you can check VAT numbers status  at any time smile.
Janusz

Here is a similar application but with the ability to verify a large amount of numbers in one cycle.
VIES verification
For many, this can be very helpful.

When doing business with a strange company Vat number must always be verified to be valid .
The date base must not serve the verification of validation of VAT numbers but to eliminate the possibility for errors in the format. That the correct number of numbers and letters for that country are submit. Each country has his format for the VAT number beginning with the country letters. For Belgium BE 0 448 910 654. country-code BE followed by  0 and nine numbers. It is to verifier the format of the number, not the VAT number validation. To eliminate typing errors. VAT may become unclaimable when the number is not correct entered.