I was wondering how to handle reverse charged VAT. If it’s towards a customer it’s really easy and you don’t need to mention it at all, but if we get a reverse charge from a supplier there is no easy way to do it. Currently I use a custom tax code so it gets specified in the Tax summary, but it’s not ideal.
Any ideas?
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What do you mean by reversing charged VAT?
Yeah, a supplier has my VAT number and instead of him paying it we have to pay it to his government we have to pay up the VAT. In Europe a very normal action when dealing with suppliers from other country (in my case Microsoft in Ireland).
An example the other way around: If a client of us has a VAT number and isn’t located in the Netherlands we reverse charge it to them as well, so they pay us the amount exclusive VAT and they have to pay the VAT to their government. In that case we have to supply our government with totals per VAT number per country.
Dutch Tax office website article about it, in English: Reverse-charging VAT
A wikipedia line about it: The mechanism for collecting VAT when the place of supply is not in the same member state as the supplier is similar to that used for Intra-Community Acquisitions of goods, i.e. zero-rating by the supplier and reverse charge by the recipient of the services (if a taxable person). But if the recipient of the services is not a taxable person (i.e. a final consumer), the supplier must generally charge VAT at the rate applicable in its own member state. (from: European Union value added tax - Wikipedia)
Can you tell me how the handle the above issue, thanks
@TheHawk I fixed it by creating a different tax code called reverse charge (x percentage) and filing the stuff under that, basically abusing the ability to create tax codes. This works fine as a temporary solution and as long as everyone using it knows about it, it is a suitable fix.
I was facing the same issue, but have solved it slightly different.
I have a business located in the Netherlands. This means that when I buy goods or services from within Europe or outside Europe, the supplier should send me an invoice without VAT. At the end of every quarter I have to report to the tax authority. This entails that I have to pay VAT on foreign purchases, although I haven’t paid any VAT. This VAT, however, can be claimed to be refunded. So at the end, no VAT has to be paid on foreign purchases.
The tax authority complicates the matter in that I have to report the VAT (to be paid on foreign purchases). There is a box for purchases inside Europe and a box for purchases outside Europe. To get these VAT amounts refunded I have to add them up to the VAT of any other (normal) purchases.
To simplify the reporting to the tax authority for myself, I want to create a report which tells me the amounts to fill in the three boxes mentioned above. Therefore, I have added two custom VAT codes: BTW 21% EU and BTW 21% non-EU. Additionally, when recording an invoice from a supplier outside Europe (say 1000 EUR), I have to record the following three lines:
- On the first line I allocate the expense amount (1000 EUR) to some account without VAT.
- On the second line, I allocate the same amount (1000 EUR) to some custom temporary account with VAT code BTW 21%. This line is necessary to claim the VAT refund of 210 EUR.
- On the third line, I have to reverse the amount on the temporary account and also reverse the VAT amount. Therefore I allocate -1000 EUR to the temporary account with VAT code 21% EU. I use another VAT code to make this amount visible on a report I print at the end of a quarter.
As a result, in sum only an amount of 1000 EUR without VAT is recorded as an expense. In addition, when printing the VAT overview, I get an overview of all the amounts to be filled in the three boxes.
I don’t know if this is the correct way to record this type of purchase invoices in Manager. If there is a better way to do this, then please let me know. But I hope this is helpful to others.
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You said they “should” send you an invoice without VAT. Don’t they “must” issue invoice without VAT?
This is perfectly clear. You pay VAT on imports but you get credit for VAT paid so these two amounts always offset immediately.
Anyway, I think this is best solved through in-built tax codes where custom tax summary report can be provided for each EU country. What figures do you need to fill in Dutch VAT return? The idea is that you wouldn’t need to use custom tax codes then.
That is correct. The supplier must issue an invoice without VAT.
The following screenshot shows an overview of figures to be filled in a Dutch VAT form. There are five sections: the first four refer to amounts over which VAT has to be paid; the fifth shows the VAT amount to be paid, the VAT amount to be refunded, and optionally whether you qualify for a VAT deduction.
For purchase invoices, lines 4a, 4b, and 5b will matter the most to most businesses. On line 4a, the total price of all purchases outside the EU (blue box) and the VAT that you would have paid if you would do the purchases in the Netherlands (red box) have to be filled in. On line 4b, the same figures except for purchases inside the EU. The figure on line 5b is the total VAT to be refunded, i.e. the sum of VAT paid on Dutch invoices and VAT paid on international invoices.
Section 2 is used in cases in which a Dutch supplier reverse charged VAT to you. The invoice total is filled in the blue box, and the VAT in the red box.
The green and purple boxes refer to sales invoices. Section 1 is an overview of sales to customers inside the Netherlands. Section 3 is an overview of sales to customers outside the Netherlands, split into customers inside the EU (3a) and customers outside the EU (3b and 3c). The difference between 3b and 3c is that 3b must be used if a customer is an entrepreneur, and 3c if a customer is a private individual. In the case of 3b, the VAT-number of a customer is required and on the invoice must be stated that VAT is reverse charged.
Sounds good! How should I imagine the process? Will I have to select the country of origin, when registering an invoice, so that Manager will detect that the invoice is belonging to an international purchase?
Thanks for you effort!
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@lubos Hello! My problem is a bit similar to these, but yet different. Here in Quebec (Canada), we have 2 different taxes: the federal one, GST/HST and the provincial one, QST. How do I enter these, in order to show separate totals for each? Only GST/HST applies to books and both apply to almost all other goods; at the end of the year, I need to know the total for GST/HST and the total for QST. I’ve created a tax code for each but can’t figure out how to apply two different tax codes on one single amount. Let’s say I purchase some stuffs for a subtotal of 19$. The GST/HST (5%) would be 0.95$ and the QST (9.975%) would be 1.90$ and the total would be 21.85$. I could enter a single tax code of 14.975% but at the end of the year, I would not have the total paid in GST/HST and the total paid in QST, and I need these separate amounts in order to apply for refunds. Your help on this issue would be greatly appreciated ASAP. Thank you very much in advance.
Your following reply under another question helped me to solve my problem. Thank you very much:
I’m planning to do this soon but be fair and don’t say it takes you almost one day to calculate figures on tax component level.
If Tax Collected for ST 12.36% + VAT 5% is 436.60, then…
ST 12.36% = 436.60 / 17.36 * 12.36 = 310.85
VAT 5.00% = 436.60 / 17.36 * 5.00 = 125.75
--------------------------------------------
436.60
Is this one day work?
Thanks. Is this the standard VAT form every business in Netherlands is familiar with?
Those forms are exactly the same as the ones I always enter.
For my business numbers 3a and 3b are mostly important with only slight usage of 4. When you do a delivery inside or outside the EU you also have to enter another form specifying the specific amounts per time period (can be monthly, quarterly etc) per VAT number.
So I might have:
Three invoices from within Europe:
1: VATNUMBERA : 2000
2: VATNUMBERB: 2000
3: VATNUMBERA: 1000
3a: 0, 0
3b: 5000, 0
3c: 0,0
This means I’ll have to enter another form (intracommunautaire levering) where I’d have to specify:
VATNUMBERA: 3000
VATNUMBERB: 2000
I know I’m repeating partially what has already been said but this is basically the flow that I normally have to do.
This page from the Dutch tax office specifies this a little bit more (http://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/business/vat/vat_on_electronic_services/suppliers_eu_countries/table_suppliers_from_eu_countries)
Hope this is of any help
Yes, it is. There is a brochure with information about VAT in the Netherlands: link. The document contains an English translation as well. I hope this can be helpful.
@ safaxe
Would this be usefull ? Reverse sales tax calculator of GST and QST 2022
tomasz and janpieterz, how did you solve it? I was thinking about adding custom VAT percentages:
0% BTW vrijgesteld (for exempts - field 1e in the form)
0% BTW verlegd (field 2a)
0% BTW EU (for companies with a valid tax number - 3b in the form AND 4b)
6% BTW EU (for those inside the EU - 3c in the form)
21% BTW EU (for those inside the EU - also 3c)
0% BTW Export (selling outside EU 3a)
6% BTW Import (buying outside EU - 4a)
21% BTW Import (buying outside EU - 4a)
Then for purchases:
- from outside the EU, I enter the invoice and ADD the 6 or 21% BTW import. Later with the tax reporting, I add that total amount to 5b on the form
- from inside the EU, I enter the invoice and add the 6 or 21% BTW EU. Later with the tax reporting, I add that total amount to 5b on the form.
For sales:
- to outside the EU I pick 0% BTW export.
- inside the EU, the % depends if the buyer has a valid tax number.
Will this work?
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Lubos, can you shed some light on this? I’m stuck when it comes down to handling VAT on domestic, EU and non-EU purchases. What’s the best way to implement this? If I cannot solve it, I might have to drop Manager (what I would regret as I like it very much).
I am in Belgium and received an invoice from the Netherlands. I am in the exact same situation. I received it with 0% VAT, but have to register it as 21% in the tax reporting. I would love manager to make this report for me 
@Bogey I am trying what you described, but then my “BTW EU 21%” is added to the actual invoice. So when I make the payment (without VAT as ofcourse I dont have to pay that) my invoice will remain underpaid forever.
Then I thought to just compose my “BTW 21% EU” from 2 parts. Being 21% and -21%. The VAT settings take this as 0% which is correct, but then on the invoice manager seems to disregard that negative VAT.
Regarding the +21% on invoice payments, you’ll have to mark the checkbox that the invoice is inclusive VAT.
Another way is to book it as usual and make a journal entry like:
Te vorderen BTW / Voorheffing
Aan Af te dragen BTW EU / Verwerving binnen de EU
(English readers please excuse for using the Dutch phrases as I don’t know the English ones)
BUT, there’s good news: I got word that they’re going to work on EU VAT! 
I got around it by making a VAT code “BTW 20% EU” but set the percentage as 0%. Now my VAT report is correct. I can not see the actual amount of VAT to declare, but quickly calculating that number every 3 months is the least of my concern.
Thanks or the hints anyway!
I’ve added VAT return for Netherlands. It doesn’t handle reverse charged VAT yet but hopefully tomorrow I will add new in-built tax codes which will then flow into this VAT return.
Anyway, if you are in Netherlands, upgrade to the latest version (15.2.15), then look under Reports tab.
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