I might need some help and/or clarity.
During custom clearance a separate small purchase invoice was overlooked and therefore VAT was not charged. For this transaction I had to apply the reverse charge.
Looking at the VAT Summary Report, this transaction alterate the total sales.
This is also exactly what I find in the Guide, whith the note: The transaction amounts are from the perspective of your business, not the supplier’s business. Therefore, Total Sales figures will be the same as Tax on Sales figures. (?!?)
I can live with the amount under “Tax on sales” even if is purchase; it’s due afterall, is a temporary liability needed for VAT declaration which reverses eventually into nihil, but I doubt on the accuracy of inflating the total sales.
This case is just a small amount, but if in the future I skip the custom billing and charge in reverse all import transactions, the discrepancy will be huge and not a pretty sight.
Searching on the forum, I landed on a thread of June 2018 in which @lubos just implemented the reverse charge. For the occasion he posted a Test Report which looks exactly as it should be, just leaving the “Total sales” in peace.
Thanks for your contribution @Davide
I should say let’s agree to disagree.
The reverse charge (inversione contabile - Dutch: verleg=move) is a method of applying VAT that allows to transfer VAT charges directly to the purchaser, rather than beared bij the seller.
It doesn’t imply purchase and sales simultaneously at all.
Logically, if theres a purchase there’s often a sales (but not necessarily). However both are treated differently and separately.
The screenshot in my previous post refers an import transaction. The total sales of the period is already in the line above the reverse and that’s the right figure matching Account payable.
The screenshot hereunder is an export transaction. The VAT charge is shifted to the purchaser.
Also in Italy, (in derogation of art. 17, paragraph 1, Presidential Decree no. 633/1972, as well as by directive no. 2006/112 / Ce) it is required that the tax payer is the taxable subject towards whom such transactions are carried out through the VAT reverse charge method (also known as “self-assessment” or "tax shift " —> inversione).
Therefore, VAT obligations in import/export (en some cases intra-country too) are beared bij the purchaser, if he is VAT taxable in his territory. To apply it, it is necessary, in fact, that both parties are (passive)subject to VAT and that the recipient resides in the territory of the charging country.
This said, since I can live with that amount in “Tax on Sales”, I do not see why a Total sales figure has to be unnecessary inflated in a report by something that has nothing to do with sales, which also mismatch with Account payable figures.
IMHO, the presentation in the screenshot of @lubos of june 2018 was the correct way.
If then, instead of “Tax on Sales” and “Tax paid”, there’s another definition like respectively “Tax payable” and “Tax Receivable”, which are correct and neutral definitions, it would also be neutral covering both VAT on sales, Reversed charge due and VAT on purchase to deduct.
@Rox, did your actual sales income on your Profit and Loss Statement increase as a result of this reverse-charged tax code? If not, I believe you arguing about the title of a column on the report. If I recall correctly, there was discussion at the time this feature was introduced about appropriate column titles. (You can see that the titles are different now than they were for the 2018 screen shot you have shown.) As I remember, the developer ultimately chose column titles that were not universally liked. But you are not submitting the Tax Summary report to your tax authority, so it really does not matter. A more import question is what shows on the Concept BTW Aangifte worksheet (which still is not what is actually submitted to the tax authority.)
I’m not arguing about colum titles. I already said I can live with Tax on sales. However, if a reverse charges has nothing to do with sales, a neutral title would maybe suite better. That was just a side issue.
Of course P&L doesn’t increase by that, Reverse is a balance transaction that eventually turns to zero. Therefore it doesn’t modify the Balance either.
My point is that the reversed amount lands in the Total sales of the summary (and transactions) report as well, inflating it bottomline (in the report) with a sales that doesn’t exist and is in my humble opinion not correct.
Certainly I’m not submitting the summary report to any authority for tax declaration.
Anyway, the report delivers enough (breakdown) information needed for filling tax declaration.
But, as I mentioned in my first post, if in the future I skip the custom direct tax billing at clearance and move to charge in reverse all import (deferred tax) transactions, I’ll have bottomline, in both Summary and Transactions, a non-reconciliable Total sales towards the effective invoiced account payables. By thousands of Euro.
It’s a report after all, but it might even raise questions in case of showing it to authority audit as a helping recap. That’s the last I would do.
About the question over the Concept BTW Aangifte worksheet, I do not use it as it doesn’t collect all data.
However, I do not see any reverse in it, while it should be mentioned in 4a to be paid and added to the bulky 5b to receive already paid.
I am not sure imho is a valid defense against incorrect information penalties.
The law is the law and manager complies with RCM for imported services, having opposing personal views for the law isn’t a valid reason to change how manager works in this regard.
The whole idea behind governments enforcing RCM is when you buy taxable supplies from abroad that skip customs tax, you should do the customs job for them and simultaneously charge a “cosmetic” tax on sales and another is inflated.
Sure for tax purposes (and only for tax purposes) both your sales and purchases are “inflated” but your bottom line isn’t.
@Ealfardan I’m not looking for any defense, I’m just trying to understand why the Total Sales bottomline has to be inflated in a tax report.
As I said, reverse charge in Tax on Sales column is fine, after all there must be a an opposite to balance Tax on Purchase.
You say my bottomline isn’t inflated. But if you look at the first image in the first post, while the Purchase side is more than correct, the bottom line of Total sales is inflated in this report, not in business figures of course.
Dutch authority asks only, in a specific box, the reversed purchase amount and the relative tax due, without any “cosmetic” on sales.
@rox, your statements are confusing. I cannot tell whether you are referring to total income on the Summary page (which should match total income on the Profit and Loss Statement) or total sales on the Tax Summary report. Please be specific and use the exact terminology of the program. My question was whether whether the reverse charged transaction resulted in actual increasing income on your Profit and Loss Statement.
Since I don’t file taxes in the Netherlands, I have no direct experience with this report. I would be very interested to read @Hennie’s comments on this issue.
I’ll be more specific. For my convenience I had a splitted VAT in the balance, Receivable and Payable, respectively in Assets and Liabilities. To do that I had to move aside the standard Dutch BTW list. That’s why…but I’m considering to convert back to the preset BTW list and use a single Tax Payable.
However, I tried the Concept BTW aangifte a test business and looks working properly with the standard settings.
@Tut, you already asked that in your first reply and I believe I already answered.
No, it does not increase or decrease anything in P&L, moreover it has not much to do with P&L since VAT and Reverse Charge are pure Balance transactions, which reflect to whole Tax Summary report, I assume.
I’m only and exclusively referring to the Total Sales in the Tax Summary report.
That’s also the case in my country, but they still want you to include it with sales, because if you didn’t, you would be claiming back taxes that the government will never receive. Basically you will be taxing the government, which can’t be right.
Thank you @Ealfardan,
The same is here, only without much “cosmetic”. Eventually it automatically ends up in the “due” side of VAT, which is sales. And that’s all fine and correct as already said.
My point was not referred to Reverse Charge in Tax on sales (Tax Summary report), which is the only way to charge and account it, but essentially to the Total Sales bottom line figure of that summary report, which doesn’t match the effective total sales.
I said I believe him. Of course I do. I know exactly how carefull and precise you should handle with authorities like AE en GdF in his country.
The discussion in this topic is all about the difference between real money and imaginary money. Or let me put it in other words: VAT charged to me by my supplier on an invoice or VAT that I charged my customer on my sales invoice is real money. So the VAT codes that are linked to a tax payable account is real money. All other tax codes are for tax filing purposes so imaginary money. If Lubos would introduce two extra columns in the VAT summary report, one on the sales side and one on the purchases side, representing the imaginary money then the problem would be solved. I worked it out in an example which you find below.
Changing the report this way has a lot of advantages.
The net sales coloumn equals to the P&L
The Total Sales colums equals tot the Debtors ledger
The net purchases equals to the P&L
The total purchases equals to the Creditors ledger
The Tax on Sales minus the Tax on Purchases equals the Tax Payable account
I think this should make everybody happy.
Next to this,this weekend I will check all tax codes in relation to the "Concept BTW Aangite and the Tax Summary report.
Reason for this: I saw in the first post of Rox the tax-code “BTW 21% verlegd non-EU”. This code doesn’t exist in the latest version of the Duth localization file. I will report my findings here.
Goedemiddag @Hennie. Thanks for your contribution. Much appreciated.
I’m quite up to date with version 21.2.17.
As mentioned before to @Tut, for my convenience I had a splitted VAT in the balance, Receivable and Payable, respectively in Assets and Liabilities. To do that I had to move aside the standard Dutch BTW list (localization file)……but I’m considering to convert back to the preset BTW list and use a single Tax Payable.
@Hennie, I don’t know if it’s off topic here. Just a couple of questions, I know you’ve been working with @lubos in setting up the BTW list and “Aangifte”:
I still have all the 4 codes of 6% (inactive) and see that are still in the localization file.
Are these still living in the background and do they still produce any effect in the “Concept Aangifte”?
In case of import non-EU, with immediate custom VAT settlement (not Reverse), I might miss the following:
… The taxable invoiced amount shouldn’t appear in 4a (is for reverse only), but all the 4 non-EU codes land there. Applying 0% vrijgesteld seems doing the trick, but is not so clean.
… The tax amount paid to custom should only be added to 5b (voorbelasting). In a test I worked it around bij cannibalizing one of the codes (9% BTW) making it 100%. Since the code acted als pure Dutch purchase, the tax amount was properly set in 5b. But that’s also not very clean.
Concerning the splitted VAT in the balance (payable and receivable), I believe it might only need 2 extra codes to make it working in both balance and Aangifte. Still I’m doubting on which is best, splitted or not…
What’s your opinion in this?
As Dutch users, we are priviliged by having a Dutch localization file with the Dutch VAT codes and the Concept BTW Aangifte but this not unconditional. It means that you can’t use so called “Custom VAT Codes”. The Concept BTW Aangifte is based and calculated on the VAT codes as included in the localization file. The old 6% codes can’t be deleted simply because of the fact that VAT calculated using these codes is in the database. If you used these codes in the past, you would screw up your database in case you change anything in these codes. Best is to make them “inactive”
Concerning your other questions, I think it is best to solve this outside this forum by sending me a private message.
Yes, we have to be very careful. As I said the report we got from Manager is different in format and classification of data but it is 100% coherent. All the official reporting is carried out by our chartered accountant with a local software. Thanks to e-invoices he doesn’t have to do so much data entry.