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VAT scenarios

Several examples of the most common VAT situations are explained. Each example consists of a description of the situation, the applicable regulations and how to configure this situation in Profit.

Naturally, not all situations have been described. Most of the situations not described involve exceptions or further specifications.

Content

Example 1 - Domestic sales

Scenario

Tom Aat BV trades in fruit and vegetables and on 1 October 2016 it will supply 10 boxes of apples to customer Jansen VOF at a price of € 25 per box. The invoice will be sent on 5 October 2016.

Regulation

Example 1

Domestic sales

Who

Tom Aat B.V.

For what

Supply of goods (apples)

Where

Domestic

When

5 October 2016

Tax

The delivery of goods in the home market is taxed.

Rate

In the Netherlands, apples fall in the rate group ‘Low'.

On 5 October 2016 the percentage for this rate group in the Netherlands will be 6%.

To pay

6% of 10 x 25.00 = 15.00

To claim

-

Invoice amount

10 x 25.00 + 15.00 = 265.00

Configuration

Example 1

Domestic sales

 

Administration

Legislating country

NL

Debtor

Name

Country of registered office

VAT duty

Jansen VOF

NL

Domestic sales

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Sales

Domestic

Liable to VAT

No

Item

Rate group

Services calculation

NL - Low

No

Rate

Country

Rate group

Effective date

Rate

NL

Layer

1-1-2001

6%

VAT code

Services calculation

Calculation

-

Normal calculation

VAT section

Country

Code

NL

1b

Example 2 – Sale of goods within the EU

Scenario

Tom Aat BV, based in the Netherlands, deals in fruits and vegetables and will deliver 10 bags of potatoes to purchaser PietFriet BVBA in Belgium at a price of € 25 per bag on 1 October 2016. The invoice will be sent on 5 October 2016.

Regulation

Example 2

Sale of goods within the EU

Who

Tom Aat B.V.

For what

Supply of goods (apples)

Where

Within the EU (Belgium)

When

5 October 2016

Tax

VAT transfer is mandatory for deliveries of goods within the EU.

Rate

In cases of VAT transfer, VAT is neither calculated nor invoiced.

To pay

-

To claim

-

Invoice amount

10 x 25.00 = 250.00

Configuration

Example 2

Sale of goods within the EU

 

Administration

Legislating country

NL

Debtor

Name

Country of registered office

VAT duty

VAT number

PietFriet BVBA

BE

Sales within the EU

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Sales

Within the EU

Transferred

Yes

Item

Rate group

Services calculation

NL - Low

No

Rate

Country

Rate group

Effective date

Rate

NL

Zero

1-1-2001

0%

VAT code

Services calculation

Calculation

No

Normal calculation

VAT section

Country

Code

NL

3b

See Example 11 – Purchase within the EU for the configuration of the purchase side.

Example 3 – Sale of services within the EU

Scenario

Pet & Co veterinary office treats animals of cattle farmer Kalf in Belgium. The treatment takes 8 hours and will be performed at Kalf's premises in Belgium on 1 October 2016. Pet & Co's hourly rate is €125.00. Pet & Co invoices on 5 October for the service rendered.

This provision is included in the VAT and ICP declarations.

Regulation

Example 3

Sale of services within the EU

Who

Pet & Co

For what

Provision of services (treatment of animals)

Where

Within the EU (Belgium)

When

5 October 2016

Tax

VAT transfer is mandatory for deliveries of goods within the EU.

Rate

In cases of VAT transfer, VAT is neither calculated nor invoiced.

To pay

-

To claim

-

Invoice amount

8 x 125.00 = 1000.00

Configuration

Example 3

Sale of services within the EU

 

Administration

Legislating country

NL

Debtor

Name

Country of registered office

VAT duty

VAT number

cattle farmer Kalf

BE

Sales within the EU

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Sales

Within the EU

Transferred

Yes

Item

Rate group

Services calculation

NL - High

No

Rate

Country

Rate group

Effective date

Rate

NL

Zero

1-10-2016

0%

VAT code

Services calculation

Calculation

Yes

Normal calculation

VAT section

Country

Code

NL

3b

Example 4 – Sale outside the EU

Scenario

Tom Aat BV, based in the Netherlands, deals in fruits and vegetables and will deliver 5000 kilos of cucumbers to purchaser Izmir in Turkey at a price of € 0.10 per kilo on 1 October 2016. The invoice will be sent on 5 October 2016.

Regulation

Example 4

Sale outside the EU

Who

Tom Aat BV

For what

Delivery of goods (cucumbers)

Where

Outside the EU (Turkey)

When

5 October 2016

Tax

Provisions of services outside the EU are exempt.

Rate

In cases of exemption, 0% VAT is calculated and invoiced.

To pay

0.00

To claim

-

Invoice amount

5000 x 0.10 = 500.00

Configuration

Example 4

Sale outside the EU

 

Administration

Legislating country

NL

Debtor

Name

Country of registered office

VAT duty

Izmir

Turkey

Export

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Sales

Outside the EU

Exempt

No

Item

Rate group

Services calculation

NL - Low

No

Rate

Country

Rate group

Effective date

Rate

NL

Layer

1-1-2001

6%

VAT code

Services calculation

Calculation

-

Normal calculation

VAT section

Country

Code

NL

3a

Example 5 – % sale

Scenario

Oysterer Van Grevelingen VOF, based in the Netherlands, delivers 6000 kg of mussels to the Mosselveiling Yerseke for a price of €1.20 per kilo. The delivery will take place on 1 October 2016 and will be invoiced on 5 October 2016.

Regulation

Example 5

0% sale

Who

Van Grevelingen VOF

For what

Delivery of goods (mussels)

Where

Domestic

When

5 October 2016

Tax

The delivery of fish, crustaceans, shellfish or molluscs by a fisher to an auction house is subject to a rate of 0% in the Netherlands.

Rate

0% VAT is charged.

To pay

0.00

To claim

-

Invoice amount

5000 x 1.20 = 6000.00

Configuration

Example 5

0% sale

 

Administration

Legislating country

NL

Debtor

 Name

Country of registered office

VAT duty

Mosselveiling Yerseke

NL

Domestic sales

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Sales

Domestic

Liable to VAT

No

Item

Rate group

Services calculation

NL - Zero

No

Rate

Country

Rate group

Effective date

Rate

NL

Zero

1-10-2016

0%

VAT code

Services calculation

Calculation

-

Normal calculation

VAT section

Country

Code

NL

1e

Example 6 – Exempt sale

Scenario

Tom Aat Groothandel BV, based in the Netherlands, sells a transit warehouse to moving company Snelle Jelle BV for the sum of €200,000.00. This amount will be invoiced on 5 October 2016.

Regulation

Example 6

Exempt sale

Who

Tom Aat Groothandel BV

For what

Provision of immovable goods (transit warehouse)

Where

Domestic

When

5 October 2016

Tax

The sale of immovable goods is exempt from VAT in the Netherlands.

In this example, we do not select taxed provision or use the agriculture arrangement.

Rate

VAT is neither calculated nor invoiced.

To pay

-

To claim

-

Invoice amount

200,000.00

Configuration

Example 6

Exempt sale

 

Administration

Legislating country

NL

Debtor

 Name

Country of registered office

VAT duty

Snelle Jelle BV

NL

Exempt

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Sales

Domestic

Exempt

No

VAT code

Services calculation

Calculation

-

-

VAT section

Country

Code

NL

1e

Example 7 – Transferred sale

Scenario

Painting company Kwast BV, based in the Netherlands, paints a home under contract from contractor Bouw Totaal BV for an agreed price of €5,800.00. Kwast BV will invoice this amount on 5 October 2016.

Regulation

Example 7

Transferred sale

Who

Kwast BV

For what

Provision of services (house painting)

Where

Domestic

When

5 October 2016

Tax

In cases of subcontracting of work or hiring of personnel in the construction sector, the VAT transfer arrangement applies in the Netherlands The VAT liability is transferred from the subcontractor or agency to the main contractor or user enterprise.

Rate

In cases of VAT transfer, VAT is neither calculated nor invoiced.

To pay

-

To claim

-

Invoice amount

5,800.00

Configuration

Example 7

Transferred sale

 

Administration

Legislating country

NL

Debtor

 Name

Country of registered office

VAT duty

Bouw Totaal BV

NL

Transferred to

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Sales

Domestic

Transferred

No

VAT code

Services calculation

Calculation

-

Normal calculation

VAT section

Country

Code

NL

1e

See also:

Example 8 – Intercompany sale

Scenario

The Tom Aat Group consists of Tom Aat Groothandel BV and Tom Aat Holding. Tom Aat Holding sends an invoice to charge software licences over to Tom Aat Groothandel BV in the amount of €40,000.00. The invoice will be sent on 5 October 2016.

Regulation

Example 8

Intercompany sale

Who

Tom Aat Holding

For what

Provision of services (software licences)

Where

Domestic

When

5 October 2016

Tax

Tom Aat Group is a fiscal unit for VAT, and therefore VAT must be paid at the group level. Consequently, no VAT is due on this internal transaction.

Rate

No VAT is invoiced.

To pay

-

To claim

-

Invoice amount

40,000.00

Configuration

Example 8

Intercompany sale

 

Administration

Legislating country

NL

Debtor

Name

Country of registered office

VAT duty

Tom Aat Groothandel

NL

No VAT

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Sales

Not applicable

No VAT (intercompany)

No

VAT code

Services calculation

Calculation

-

-

Example 9 – Telesales

Scenario

Yacht builder Riviera Yachts, based in the Netherlands, sells a yacht to a wealthy Italian individual, Mr Riccone. The yacht is sold for € 37,500 and will be invoiced by Riviera Yachts on 5 October 2016.

Regulation

Example 9

Telesales

Who

Riviera Yachts

For what

Delivery of goods (yacht)

Where

Within the EU (Italy)

When

5 October 2016

Tax

To prevent customers who do not make VAT declarations, such as private individuals, buying goods in bulk in the EU country with the lowest VAT rate, the arrangement for 'telesales' applies within the EU.

This means that the provider charges the VAT rate for the EU country of the purchaser. This VAT must be reported and paid to the tax authority in the purchaser's country.

Rate

In Italy, yachts fall under the 'High' rate group.

On 5 October 2016 the percentage for this rate group in Italy is 20%.

To pay

20% of 37,500.00 = 7,500.00 (payable to the Italian tax authority)

To claim

-

Invoice amount

37,500.00 + 7,500.00 = 45,000.00

Configuration

Example 9

Telesales

 

Administration

Legislating country

NL

Debtor

Name

Country of registered office

VAT duty

Mr. Riccone

Italy

Telesales

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Foreign rate

Sales

Within the EU

Liable to VAT

No

Yes

Item

Rate group

Services calculation

Italy - High

No

Rate

Country

Rate group

Effective date

Rate

Italy

High

01/10/1997

20%

VAT code

Services calculation

Calculation

Rate country

Rate group

-

Normal calculation

Italy

High

VAT section

Country

Italy

This means a declaration must be made in Italy. This can be done by creating an Italian section and linking the aforementioned VAT code to it. By means of a view, analysis or report, you can display the sum to be paid and make the declaration.

Example 10 – Domestic purchase

Scenario

Tom Aat BV, based in the Netherlands, deals in fruits and vegetables and will buy 5000 kilos of cucumbers from grower West Land VOF at a price of € 0.05 per kilo on 1 October 2016. The invoice will be received on 5 October 2016.

Regulation

Example 10

Domestic purchase

Who

Tom Aat BV

For what

Acquisition of goods (cucumbers)

Where

Domestic

When

5 October 2016

Tax

Domestic acquisition of goods is taxed.

Rate

In the Netherlands, cucumbers fall under the 'Low' rate group.

On 5 October 2016 the percentage for this rate group in the Netherlands will be 6%.

To pay

-

To claim

6% of 5000 x 0.05 = 15.00

Invoice amount

5000 x 0.05 + 15.00 = 265.00

Configuration

Example 10

Domestic purchase

 

Administration

Legislating country

NL

Creditor

Name

Country of registered office

VAT duty

West Land VOF

NL

Domestic purchase

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Purchase

Domestic

Liable to VAT

No

Item

Rate group

Services calculation

NL - Low

No

Rate

Country

Rate group

Effective date

Rate

NL

Layer

1-1-2001

6%

VAT code

Services calculation

Calculation

-

Normal calculation

VAT section

Country

NL

5b

Example 11 – Sale within the EU

Scenario

Tom Aat BV, based in the Netherlands, deals in fruits and vegetables and buys 600 crates of oranges from grower Clementine in Portugal. The oranges cost Tom Aat BV 3.50 Euros a crate. The invoice will be received on 5 October 2016.

Regulation

Example 11

Purchase within the EU

Who

Tom Aat B.V.

For what

Acquisition of goods (oranges)

Where

Within the EU (Portugal)

When

5 October 2016

Tax

The acquisition of goods originating from another EU member state is known as an 'intra-community acquisition'. An intra-community acquisition of goods is taxed in the country of delivery, but at the same time is also deductible as input tax.

Rate

In the Netherlands, oranges fall under the 'Low' rate group.

On 5 October 2016 the percentage for this rate group in the Netherlands will be 6%.

To pay

6% of 600 x 3.50 = 126.00

To claim

6% of 600 x 3.50 = 126.00

Invoice amount

In this case, the supplier makes what is known as an 'intra-community delivery'. For intra-community deliveries, VAT is transferred to the purchaser.

Therefore, Clementine does not charge Tom Aat BV any turnover tax.

600 x 3.50 = 2100.00

Configuration

Example 11

Purchase within the EU

 

Administration

Legislating country

NL

Creditor

Name

Country of registered office

VAT duty

Clementine

Portugal

Purchase within the EU

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Purchase

Within the EU

VAT transferred

Yes

Item

Rate group

Services calculation

NL - Low

No

Rate

Country

Rate group

Effective date

Rate

NL

Layer

1-1-2001

6%

VAT code

Services calculation

Calculation

No

Normal calculation

For Transferred from, the Normal calculation is always selected as the calculation method. Of course, in the case of Transferred from, from Order Management the calculation uses 0% and the VAT amount is only calculated when the VAT declaration is prepared.

If the VAT duty is set to 3 =  Purchase within EU or 4 = Import outside EU in the VAT code, then the VAT amount only appears on the declaration in section 4a and is deducted again from the input tax. Nothing is entered on the linked ledger accounts in the VAT code.

VAT section

Country

NL

4b

Example 12 – Purchase outside the EU

Scenario

Yacht builder Riviera Yachts, based in the Netherlands, buys a navigation system from Norwegian company SeaSensor AB for a sum of €6500.00. The system is delivered by SeaSensor AB via Schiphol airport. The invoice will be received on 5 October 2016.

Regulation

Example 12

Purchase outside the EU

Who

Riviera Yachts

For what

Acquisition of goods (navigation system)

Where

Outside the EU (Norway)

When

5 October 2016

Tax

Goods imported from outside the EU are taxed in the country where the goods enter the EU. However, this tax is also deductible as input tax.

Rate

In the Netherlands, navigation systems fall under the 'High' rate group.

On 5 October 2016 the percentage for this rate group in the Netherlands will be 21%.

To pay

21% van 6,500.00 = 1,365.00

To claim

21% van 6,500.00 = 1,365.00

Invoice amount

In this case, the supplier is exporting to an EU member state. For this, VAT is transferred to the purchaser.

Therefore, SeaSensor AB does not charge Riviera Yachts any turnover tax.

6,500.00

Configuration

Example 12

Purchase outside the EU

 

Administration

Legislating country

NL

Creditor

Name

Country of registered office

VAT duty

SeaSensor AB

Norway

Import

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Purchase

Outside the EU

Transferred

Yes

Item

Rate group

Services calculation

NL - High

No

Rate

Country

Rate group

Effective date

Rate

NL

High

1-10-2016

21%

VAT code

Services calculation

Calculation

No

Normal calculation

For Transferred from, the Normal calculation is always selected as the calculation method. Of course, in the case of Transferred from, from Order Management the calculation uses 0% and the VAT amount is only calculated when the VAT declaration is prepared.

If the VAT duty is set to 3 =  Purchase within EU or 4 = Import outside EU in the VAT code, then the VAT amount only appears on the declaration in section 4a and is deducted again from the input tax. Nothing is entered on the linked ledger accounts in the VAT code.

VAT section

Country

NL

4a

Example 13 – Exempt purchase

Scenario

Tom Aat BV, based in the Netherlands, will receive an invoice from TNT Post on 5 October 2016 for the carriage credit used for the postage machine in the first half of 2016 in the amount of €520.00.

Regulation

Example 13

Exempt purchase

Who

Tom Aat BV

For what

Acquisition of services (postage)

Where

Domestic

When

5 October 2016

Tax

Public services, including postage, are exempt from VAT in the Netherlands.

Rate

VAT is neither calculated nor invoiced.

To pay

-

To claim

-

Invoice amount

520.00

Configuration

Example 13

Exempt purchase

 

Administration

Legislating country

NL

Creditor

 Name

Country of registered office

VAT duty

TNT Post

NL

Exempt

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Purchase

Domestic

Exempt

No

VAT code

Services calculation

Calculation

-

-

VAT section

Country

NL

5b

Example 14 – Transferred purchase

Scenario

Yacht builder Riviera Yachts, based in the Netherlands, hires on freelance provider Van Stoffelen upholstery to upholster a motor yacht being built by Riviera Yachts under contract. On 5 October, Van Stoffelen invoices for 40 hours of work at an hourly rate of €35.00.

Regulation

Example 14

Transferred purchase

Who

Riviera Yachts

For what

Acquisition of services (upholstery)

Where

Domestic

When

5 October 2016

Tax

In cases of subcontracting of work or hiring of personnel in the shipbuilding sector, the VAT transfer arrangement applies in the Netherlands The VAT liability is transferred from the subcontractor or agency to the main contractor or user enterprise.

Rate

In cases of VAT transfer, VAT is neither calculated nor invoiced.

To pay

-

To claim

-

Invoice amount

40 x 35.00 = 1,400.00

Configuration

Example 14

Transferred purchase

 

Administration

Legislating country

NL

Creditor

 Name

Country of registered office

VAT duty

Van Stoffelen upholstery

NL

Transferred

VAT duty

Purchasing / Sales

Transaction

Tax

Services calculation applicable

Purchase

Domestic

Transferred

No

Item

Rate group

Services calculation

NL - High

-

Rate

Country

Rate group

Effective date

Rate

NL

High

1-10-2016

21%

VAT code

Services calculation

Calculation

-

-

VAT section

Country

NL

2a

See also:

Example 15 – Purchase of excluded services

Scenario

A member of the sales team at yacht builder Riviera Yachts, based in the Netherlands, takes part in a water sports convention organised by the firm Shipyard Exhibition in London. On 5 October, an invoice of €140.00 is received for the ticket.

Regulation

Example 15

Purchase of excluded services

Who

Riviera Yachts

For what

Acquisition of services (participation in convention)

Where

Within the EU (Great Britain)

When

5 October 2016

Tax

In the Netherlands, the VAT on participation in a trade show or convention in an EU country must be paid in that country.

Therefore, an invoice with foreign VAT is received. This VAT cannot be reported on the turnover tax declaration. This VAT can be claimed by the foreign tax authority.

Therefore, in this example, the company is subject to VAT abroad.

Rate

The foreign country's rate applies here.  In Great Britain, participation in a convention falls under the 'Standard rate' group.

On 5 October 2016 the percentage for this rate group in Great Britain will be 17.5%.

To pay

17.5% of 140.00 = 24.50

To claim

-

Invoice amount

140.00 + 24.50 = 164.50

Configuration

Example 15

Purchase of excluded services

 

Administration

Legislating country

NL

Creditor

Name

Country of registered office

VAT duty

Shipyard Exhibition

GB

Purchase within the EU (excluded services)

VAT duty

Purchasing / Sales

Transaction

Tax

Foreign rate

Services calculation applicable

Purchase

Within the EU

Liable to VAT

Yes

No

Item

Rate group

Services calculation

GB – Standard rate

-

Rate

Country

Rate group

Effective date

Rate

GB

Standard rate

01/01/2010

17.5%

VAT code

Services calculation

Calculation

-

Normal calculation

VAT section

Country

UK

Process

VAT/ICP