Reverse charged VAT transaction EU


I have recently started using Manager for keeping accounts for my small business. And so far I am loving it.
I have read some topics about this on forum here, but haven’t yet figured out how to add this transaction.
I am not very good at accounting, so sorry if I am asking a silly question, but I would be really thankful if someone explained how to do this in Manager.

My business is located in Sweden (base currency SEK), and I purchased a product from a vendor in Ireland (in Euro). I provided my VAT registration number while purchasing the product. So the vendor didn’t charge me any VAT on the invoice, but I still have to pay Swedish VAT (called moms in Sweden, 25%) . So what I would like to do is to be able add this amount to the Tax payable, but no matter how I try to do, I can’t balance it out somehow.

Can someone with experience please explain how to add this kind of transaction so that the the VAT to be paid ends up correctly (i.e. in the liability).

Thanks in advance for any help.

If you read through the below topic it describes the process near the end but essentially to take up the moms in SEK you need to modify how you enter the Invoice where you are being charged the moms. If the Invoice has a moms charge of 250, then this was based on a purchase of 1000. So via any clearing account you would do the following two lines when entering the invoice:

Clearing account : Amount = 1000 : moms = 250
Clearing account : Amount = -1000 : moms = 0 (note minus sign)
This will put 250 in the tax liability account and nothing else as they cancel out

It still doesn’t work as it should. I received an invoice without VAT from the vendor. So first I entered the invoice as I received from vendor without VAT (see below).

The balance sheet after I add the above invoice looks like this (I have verified that this balance sheet is correct). This balance sheet however does not reflect my tax liability correctly as I have to pay 25% VAT on 303.92 EUR (i.e 722.41 SEK):

Now I edit the invoice as you said:

This is how my balance sheet looks like after I update the invoice. As you an see there is no increase in the Tax payable. The Tax payable is reduced by 722.41 SEK and the Accounts payable is increased by 722.41 SEK. So the overall liability remains the same instead on increasing by 722.41 SEK.

I still have no idea how to handle this transaction. There seems to be many people from EU using Manager. Can someone please help how to add this transaction correctly?

Hi @bhavikpatel,

Have a look at these 2 ways of deaing with this issue. Click on topic to see the rest.

Ok, what you have done looks quite right but we need to clarify a few things with regards to the Moms as its starting to appear that you don’t have to do anything at all with regards to the Mons.

To start with 303.92 EUR = 2.889,64 SEK which gives a Moms of 722.41 - correct.
Also, as you provided your Mons registration to the supplier you purchased tax free - correct
It also appears that you haven’t received any Customs or Importation Invoice for the Mons - correct

If these are all correct, then you don’t have to do anything with regards to Mons as you haven’t actually paid any. You only take up Mons when you have actually paid it to someone else. Eg If you purchased from a Swedish supplier (say 5000 SEK) then you would have 4000 expense and 1000 Mons which would be claimed back. But if you had a Mons Free purchase with that supplier then you would only pay 4000 and there would be no Mons to pay or claim. With the Irish supplier you had a Mons Free purchase - so no Mons payable or claimable.

The Balance Sheet Tax Payable account adds up Mons you have “received” from customers and deducts Mons you have “paid” to suppliers and at the end of the period you pay the difference to the tax man.

If we now study your second screenshot Balance Sheet. The amount under Accounts Payable represents the Mons, but who is that owing to? Not the supplier. So lets say its owing to the tax man, but any Mons paid is claimable back (the reduction in the tax payable account balance) and who is going to pay the Mons back, the tax man. So while one hand taketh another hand giveth back.

Therefore, delete the extra entries from the suppliers invoice and you are ready to go. However, if you do get a separate invoice for the Mons, then treat it as a completely separate stand alone transaction which would then require the double line entry as used above.

Hi @bhavikpatel

If you still have to pay 25% while you purchase a product, then shouldn’t you enter it like this.

And you will end up with summary like this

You can’t take up any form of a tax that hasn’t been charged to you by a supplier.
Also, why is the Accounts Payable balance below the Invoice value. The supplier is owed 303,92 not 227,94. Tax is not a discount. Plus, inventory values never include the tax payable component.