If the company’s revenue exceeds 500 000 euros in a financial year, the payment based VAT processing has to be disabled. Therefore, it is recommended to constantly keep an eye on the revenue as the fiscal year progresses. Procountor does not automatically track the possible exceeding of the revenue limit.
The payment based VAT is disabled in VAT defaults view.
The VAT defaults view is accessible by choosing Management > Accounting info > VAT defaults. Disable the payment based VAT function by clicking the Disable button. Remember to also click the Save button so the changes are saved to the environment.
Transition to the accrual basis VAT processing
Changing the type of the VAT processing has effects on value added tax reporting and payments. In order to successfully monitor the accounting entries and the amount of value added tax, it is recommended to carefully plan the transition process.
The transition process begins with determining the time for accrual basis VAT processing implementation. When the value added tax processing is changed to accrual basis from the payment based (or cash basis), the VAT statuses have to be updated for all non-reported accounting entries and default postings. The VAT status has to be changed for retrospective periods. New VAT summaries are created for all periods that include changes. Reports are used to check that no payment based accounting entries have been left in the environment. After these steps, the payment based VAT can be disabled in the VAT defaults view.
Activating Domestic VAT status
Domestic, payment-based VAT status is used when the payment based VAT processing is enabled. When a transition to accrual basis VAT processing is underway, Domestic VAT status has to be set for all non-reported accounting entries manually.
The Domestic VAT status that functions on accrual basis is not active by default in Used VAT percentages section of the VAT defaults view. Domestic VAT status is activated again by marking the selection boxes in Sales invoice and Purchase columns. After this activation, the Domestic VAT status can be found in the menus of accounting receipts and in the settings of posting defaults.
Search of payment based receipts and defaults
Payment based VAT processing is carried out always when the VAT status of an accounting entry is Domestic, payment based. The VAT date on an accounting receipt determines the time when the entry is included in the tax return for self-assessed taxes. When it is needed to return to use accrual basis VAT processing, it is important to note especially those payment based receipts and accounting entries that have not yet been reported on the tax return for self-assessed taxes.
The logic behind the payment based VAT processing is that payment based value added tax is entered to a specific account in the balance sheet to wait for a payment transaction. The examples presented in this online manual have used account 2931 Payment based VAT that has been used with all non-reported value added taxes. When a transition process is underway, the environment may contain old open sales or purchase invoices that have not yet been paid.
Payment based VAT personal ledger report can be used to search for all receipts that include value added tax that has not yet been reported with the tax return for self-assessed taxes. The report is found in Accounting > Reconciliation tools > Payment based VAT personal ledger.
When the VAT processing is changed to the accrual basis procedure, all non-reported entries and default settings have to be updated with the Domestic VAT status.
The easiest way to check possible entries and defaults with Domestic, payment-based VAT status in the environment is to click the Disable button in the VAT defaults view. By doing this, you will receive a list of all controls in accounting material related to the payment based VAT.
Save the list in PDF or Excel format. After this, you can go through all listed receipts and defaults in the environment in question.