VAT on Reverse Charge

If you buy services for the purposes of your business from vendors (suppliers) in other EU countries or from outside the EU, you have to account for the VAT yourself. You charge yourself the VAT at the rate applicable in your country. If you are registered for VAT, you can claim this output VAT back. Otherwise, you have to pay the levied VAT amount to the tax authorities. This is known as the reverse charge and it allows you to act as both the vendor and the customer.  
 
The amount of VAT is worked out from the total amount of services provided to you multiplied by the VAT rate applicable in your country.
 
VAT Accrual for Services document allows you to calculate the VAT amount you are obliged to accrue for services received from foreign vendors (according to the system of self-assessment) based on the received invoice date.
 
As with customs import declarations, you can create a new VAT accrual for services document with or without reference to a purchase invoice. However, unlike in case of  customs import declarations, it is not obligatory to refer to any purchase documents neither at the level of the whole document nor at the item level. You do that with the sole aim to simplify the process of adding services to the document and providing information about them.   
 
If you create the VAT Accrual for Services document with reference to the specified purchase invoice, services and their details are automatically retrieved from the referred document. Nevertheless, you can edit the detail provided if required.
 
If you create the document without reference to any purchase documents, you have to add services and enter information about them manually.
 
You can combine both strategies for adding services to the VAT accrual for services document. You can first specify a purchase invoice and retrieve services from it, and then manually add other services.
 
The document results in a posting that affects the transaction journal:
 
  • If your company is registered for VAT

1.The input VAT account is debited with total VAT amounts grouped according to VAT rates (the sum of all VAT amounts charged on each item).

2.The output VAT account is credited with total VAT amounts grouped according to VAT rates (the sum of all VAT amounts charged on each item). 

  • If your company is not registered for VAT

1.The expense account is debited with the total VAT amount to be paid to the tax authorities.

2.The account of tax office is credited with the total VAT amount to be paid to the tax authorities.

 

To go to the VAT Accrual for Services 

  1. On the Codejig ERP Main menu, click the VAT tab.
  2. Under the VAT tab, click Accrual.
 
 
More information
Create a New VAT on Reverse Charge Document
VAT on Reverse Charge: General Area
VAT on Reverse Charge: Services Section