How to save on your VAT declaration by optimising your accounting?
Posted: Sun Dec 22, 2024 4:17 am
Value Added Tax (VAT) is an indirect tax levied on consumption and is not collected directly by the Tax Agency, since it is the seller who, at the time of the commercial transaction, acts as a collector by collecting VAT from its customers. Companies, in addition to collecting VAT on their sales, have the right to deduct the VAT incurred in the course of their activity in their VAT declaration, having to pay the positive balance to the tax authorities or, in the event that the balance is in favour of the company or self-employed person, having the right to have the tax authorities refund them.
As we mentioned, we are faced with a neutral tax for companies , but although it does not represent any income or expense for them, since it falls on the final consumer, any business can russian phone number whatsapp benefit from it if it decides to use it as a form of financing .
In addition to the financing involved in collecting VAT and not paying it until the monthly or quarterly VAT declaration is made, as the case may be, if the settlement date arrives and payment is due and there is not enough liquidity , the Tax Agency can be asked for a deferral of tax debts without collateral, for an amount of up to 30,000 euros .
In any case, to avoid surprises, the best option is to carry out efficient tax management, relying on accounting programs such as Sage 50cloud that allow you to directly submit Form 303 and know the result of the VAT declaration at all times.
Should VAT be used as a tool for company financing?
Many SMEs and self-employed people use VAT as a means of financing, so that the VAT amounts collected are used to finance the daily operations of the company , which in principle is positive for it, since it constitutes an injection of liquidity that can be used to optimize the cash flows of the business.
This is explained in a practical way in this example. A company issues an invoice for an amount of 1,210 euros, and instead of differentiating the part that really constitutes income (1,000 euros) from the part that corresponds to tax (210 euros), it considers the entire invoice as income and uses it, for example, to repay a loan. The problem may lie in the fact that, if when the VAT declaration has to be made, the business has not generated sufficient liquidity with its daily operations to face the settlement, the company may find that it cannot pay the Tax Agency the VAT it has collected.
This does not mean that the amount corresponding to the tax charged to clients has to be set aside, since we are using a free source of financing , which can also be extended if at the time of liquidation there is no liquidity, by requesting a deferral of payment of the tax , as we mentioned above.
As we mentioned, we are faced with a neutral tax for companies , but although it does not represent any income or expense for them, since it falls on the final consumer, any business can russian phone number whatsapp benefit from it if it decides to use it as a form of financing .
In addition to the financing involved in collecting VAT and not paying it until the monthly or quarterly VAT declaration is made, as the case may be, if the settlement date arrives and payment is due and there is not enough liquidity , the Tax Agency can be asked for a deferral of tax debts without collateral, for an amount of up to 30,000 euros .
In any case, to avoid surprises, the best option is to carry out efficient tax management, relying on accounting programs such as Sage 50cloud that allow you to directly submit Form 303 and know the result of the VAT declaration at all times.
Should VAT be used as a tool for company financing?
Many SMEs and self-employed people use VAT as a means of financing, so that the VAT amounts collected are used to finance the daily operations of the company , which in principle is positive for it, since it constitutes an injection of liquidity that can be used to optimize the cash flows of the business.
This is explained in a practical way in this example. A company issues an invoice for an amount of 1,210 euros, and instead of differentiating the part that really constitutes income (1,000 euros) from the part that corresponds to tax (210 euros), it considers the entire invoice as income and uses it, for example, to repay a loan. The problem may lie in the fact that, if when the VAT declaration has to be made, the business has not generated sufficient liquidity with its daily operations to face the settlement, the company may find that it cannot pay the Tax Agency the VAT it has collected.
This does not mean that the amount corresponding to the tax charged to clients has to be set aside, since we are using a free source of financing , which can also be extended if at the time of liquidation there is no liquidity, by requesting a deferral of payment of the tax , as we mentioned above.