Sales tax

VAT return, what is it anyway?

VAT stands for value-added tax. Products or services you sell are charged with sales tax and products or services you purchase are also increased by sales tax. So basically, you have to pay tax on your turnover and receive tax back on your purchases. The difference between sales and purchases is value added - and that is what you end up paying tax on. So value-added tax (VAT) is actually a better term than sales tax - but both terms are used.

Most entrepreneurs are VAT operators.

Generally, these are entrepreneurs who own a business or practice a profession independently. This can be a sole proprietorship but also or a bv, foundation or vof. Sometimes it is even the case that you are not considered an entrepreneur for income tax purposes, but are for VAT purposes. (You can check with the tax authorities how that is for you). All 'VAT entrepreneurs' are required by law to keep records.

Each period, you are required to file sales tax returns through the tax authority website.

For most entrepreneurs, the period is a quarter. For entrepreneurs who have to remit more than €15,000 of VAT per quarter, the declaration is done on a monthly basis. And for entrepreneurs with a low turnover, the set-off may be done once a year.

Did you know that... the invoice date determines the period in which VAT is payable and not the customer's payment date?

Even if you had no turnover in a period, the return form should still be filed - but with turnover 0.

It is very important to file VAT returns on time.

This is always done before the end of the month after the closed period. The payment must also reach the tax authorities on time, otherwise you run the risk of an additional tax assessment and that is a waste of money, right? Generally, an entrepreneur will get a warning once but our advice is to better avoid this. So don't wait until the very last day because if the bank has a failure that day, the payment will be too late for the tax authorities.

Sales tax return exceptions

There are certain exceptions for sales tax. Small entrepreneurs - that is, those with a very low turnover, for example, may be subject to the small entrepreneur scheme. In that case, you do not have to pay VAT.

You can also get VAT exemption if you are in certain professions, for example, a journalist or someone in healthcare.

Exemption also applies to products on which VAT has already been paid in another country. These are taxed with 0%.

Jacobs Advies- en Administratiekantoor knows exactly how all the rules work. We will be happy to relieve you of worries. Would you like to know how we can relieve you of your sales tax return? Take contact with us and we will inform you of the possibilities.

As an entrepreneur, you need a VAT number

You will receive this VAT number from the tax authorities as soon as you register as an entrepreneur with the chamber of commerce. It is important to include this number on all invoices. An invoice should also clearly show the amount excluding VAT, the VAT rate (usually 21% sometimes 9%) and the amount including VAT.

Calculating VAT is easy with a simple calculation: multiply the sale amount of the product or service by the percentage of VAT you are supposed to charge, i.e. 9 or 21 per cent. Add this amount to the original price of your service or product. The result is the price including VAT.

You will receive notice from the tax authorities that you have to pay VAT after registering with the Chamber of Commerce. However, it is your own responsibility to actually do so. If you choose to outsource your declaration, we will make sure it is always done correctly and on time.

Made a mistake in the VAT return?

Don't panic! If a mistake has been made in the VAT return for an amount below 1,000 euros, this amount can be offset in the next period. If the amount exceeds 1,000 euros, then a form ' suppletion turnover tax' can be filled in via the website of the tax authorities. The excess amount will then be refunded (if approved).

On which products and services can I reclaim VAT?

Have you purchased certain products or services for business use? For example phone/computer/course or training? If so, you may offset the input VAT on these products and services. You do this by entering this amount as input VAT on the VAT return.

Did you know... you cannot deduct VAT for the cost of a business dinner or lunch?

However, you can deduct these costs in the accounts for profit calculations and ultimately for income tax in the case of sole proprietorships or corporate income tax in the case of private limited companies. This applies more or less to all entrepreneurs who make a profit. There are also exceptions for income tax - we will be happy to inform you about this during a personal consultation.