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How to apply VAT reduction for small businesses (Dutch)


#1

In Holland we have a rule that you can get a VAT reduction for small businesses. How do I handle this in Manager?

Example:
A photographer has annual sales (excluding VAT) of € 30,000. About this 21% sales tax will be charged. That is € 6,300. He bought goods (such as cameras, films, filters and lenses) with € 5,330 VAT which he has paid. This amount may be subtracted as input tax. To determine how much tax he has to pay, he makes the following calculation.

VAT 21% on € 30,000               € 6,300
Tax bought goods                  € 5.330-
VAT amount payable                €   970
Reduction for small businesses    €   970-
To pay                            €     0

The VAT reduction leads to more profit. So I need to add the income tax return for the benefit of the VAT reduction to count on the results. But how do I handle this in Manager? I do not physically get paid to my bank account (the amount to receive is € 0). In Manager, at Summary, Other liabilities, I still see I need to pay Tax.

Thanks for your cooperation!


#2

To be honest. I’ve never heard of this. But if the government is really forgiving VAT payable, simply create new income account called VAT reduction for small business or something like that. Then make journal entry where you…

  • Debit Tax liability by 970 EUR
  • Credit VAT reduction for small business by 970 EUR

#3

Thanks for your answer; this did the trick!


#4

Hi guys,

@Roeland As a matter of fact we’re discussing Dutch/EU VAT taxes here:
http://forum.manager.io/t/how-to-handle-reverse-charged-vat/1254/8

@lubos What Roeland is referring to is field 5d on the Dutch tax form (in thread mentioned above).
It’s a formula used to give small business owners an extra VAT deduction.