We started a new company located in the Netherlands in Q1 2019. The new company is a subsidiary of our parent company, which is in the United States. Our other companies are on QB Enterprise. I am a new QBO plus the added bonus of it being an international company. I understand the basic concepts of VAT Tax. Input VAT is the value added tax added to the price you pay for eligible goods or services. Output VAT is the value added tax that you calculate and charge on your own sales of goods and services. I need help understanding the following about the three VAT accounts in the liability section of the Balance Sheet: VAT Refunds Received, BTW Hoog Payable, and BTW inkoop hoog Payable.
Basically, I am confused as to the function of recording VAT on QBO. Are these accounts system created that we cannot
modify? I understand the concept of input and output; however, I do not understand how they interact when filing the VAT return. I feel that I am missing a piece of the puzzle to understand how these accounts interact under Dutch tax law.
Thank you in advance for your help.
Let me help you record your VAT in QuickBooks Online, @KEW13.
To start with, let's talk about how does the how Dutch VAT works. The Dutch value-added tax ( spelled in Netherlands as "BTW") is a general consumption tax, which is supposed to be ultimately born by the consumer. The VAT is included in the retail price of basically all goods and services.
In general, the VAT must be included in the invoice issued by the supplier of goods or services.
On the other hand, VAT Refunds Received are VAT paid in which you can reclaim for goods and services you've purchased for use in your business. If a purchase is also for personal or private use, you can only reclaim the business proportion of the VAT.
Here's an example: You work from home and your office takes up 20% of the floor space in your house. You can reclaim 20% of the VAT on your utility bills.
We treat these transactions as a liability since your company is paying for it even though these purchases are reclaimable. You must keep these records to support your claim and show how you arrived at the business proportion for a purchase.
There's no option we can modify this in QuickBooks at the moment. I'll share this thread with our product engineers for further review.
I'm always here to help if you have any other concerns or questions. Just tag my name in the comment section and I'll get back to you as soon as I can.
Thank you for the quick reply to my email. Per your response, I have additional questions:
Note - this company was formed in March 2019 so it is a startup company, which creates an unique situation. In Q1, Q2 and Q3, we only had Input VAT. This is why we received a refund for each quarter. In Q4, we have Input VAT and Output VAT, which will net on the VAT return.
Basically, I have three accounts with balances in them at year end. We received a refund from the HRMC for Q2 and Q3. Why would you not apply it to the BTW inkoop hoog Payable account?
I am confused with the proper accounting presentation on the Balance Sheet. See below
1) VAT Refunds Received - 21,040
2) BTW Hoog Payable - 7,055
3) BTW inkoop hoog Payable - (33,978)
Hello again, KEW13. Thanks for the details.
The answer is Yes on your 1st question. Since the accounts in QuickBooks Online are in default.
However, for the 2nd question is a No with the same explanation on the 1st question.
For the 3rd question, it's not necessarily since QBO will follow the amounts posted in each box when filing the return.
As for the last question, you can create an Adjustment. I can help walk you through on how to record a VAT refund from HRMC in QuickBooks Online (QBO).
But before doing so, I'd recommend contacting your account first for guidance in handling your VAT return and the adjustment itself.
You can read through this article to learn more about VAT and other related tasks.
If there's anything else I can do for you, let me know by commenting below. I'd be happy to further assist you. Have a great day.
We went through the steps of filing the return and applying the payment on QBO. Another question on how to handle adjustments? The VAT Suspense account has a balance of 0.25, which is due to rounding from the refund versus the amount calculated on the invoices. We are unable to delete and redo the filing - can you add an adjustment after the fact?
You can set up an expense account if you want to increase your sales tax due, or an income account to decrease it. Let me walk you through the steps.
Please check this article for detailed steps: Create or Delete a Sales Tax Adjustment.
You'll want to run reports in QuickBooks Online to focus on the aspects that you want to show: Run Reports in QuickBooks Online.
Let me know if you need further assistance. I'll always be right here to help.
Hi MariaSoledadG..I have a similar problem to this scenario. We pay the net VAT output after the input has been deducted from the total amount. Since there is no actual payment for it, what transaction is done to clear the amount from VAT payables account? Is it an adjustment or a journal entry since there is no bank to credit the amount to? Thanks
Welcome to the QuickBooks Community, @ MAI-Bees. Let me help you with your query.
We can create a journal entry to clear the amount from the VAT payables account. To create a journal entry, you can follow the steps below:
If you're unsure what accounts to use for your journal entry, I suggest consulting an accountant. They can provide you with the advice to keep your books accurate.
I'm all ears if you have additional questions about this. It’s my pleasure to help you. Have a nice day!