About recognising the pending VAT on payments

To satisfy these requirements, in Visma Net, you can use the On payment VAT recognition method. With this method, you recognise VAT amounts based on the payments applied to documents, so the VAT amount of a document is recognised on the date when the payment was applied to that document.

You can recognise the VAT amount fully or partially, depending on whether the payments completely or partially cover the amount of the document. If the document is paid partially, the VAT amount to be recognised is calculated proportionally to the applied payment.

Initiation of the VAT recognition process

You initiate the process of recognising the pending VAT in the Recognise input VAT (TX503500) window or the Recognise output VAT (TX503000) window, depending on whether input or output VAT should be recognised.

In one of these windows, you specify the following selection criteria, which the system uses to load applications to the table:

Date

Applications with a date earlier than or the same as the specified date are loaded. By default, the current business date is specified. To load the applications with any date to the window, clear this field.

Branch

The branch for which documents (such as supplier invoices) are paid.

Tax agency

The tax agency that is associated with the VAT to be processed.

VAT ID

The VAT code that was used for calculating the VAT amounts to be recognised by the process. Only the VAT codes associated with the selected tax agency are available for selection. You can leave this field empty, so that the documents subject to all available pending VAT associated with the agency will be loaded.

In the top part, you should also make sure the VAT recognition method is On payments. By default, the option specified for the tax agency you have selected is shown.

Once the applications are loaded to the table, you select one item or multiple items in the list, and initiate the process by clicking Process in the window toolbar. (To process all listed items, you click Process all.)

When you run the process of recognising the pending VAT, the system generates a general ledger batch (or multiple batches) to move the VAT amounts from the pending accounts to the actual VAT payable (or VAT claimable) accounts.

If only partial payment has been applied to a listed document, the system calculates the amount of the VAT to be recognised proportionally to the payment that was applied to document amount.

Example of general ledger transactions generated when partial payment has been applied

This section provides an example of the general ledger transactions that the system generates when a partial payment has been applied and recognised.

Suppose your company issues a €1000 invoice dated 01.01.2020 for services. The services are subject to a 7% VAT, which should be recognised after the payment is received. When this invoice is recorded in the system, the system creates the following entries in the General ledger.

On 20.1.2020, the customer pays €535, which is half of the amount it must pay for the services plus the €35 VAT amount (7% of €500). This VAT amount must be recognised and posted to the General ledger once this payment is processed. As a result, the system creates the following entries in the General ledger.

The VAT report that is generated at the end of the period, on 31.1.2020, will include €35 of output VAT and €535 of taxable sales.

Parent topic: Recognition of pending VAT - overview

Related pages

Concepts

• About VAT report preparation
• Create a VAT