what is vat? - introduction - mffa belastingadvies | tax advice
TRANSCRIPT
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MFFA Belastingadvies | Tax Advice
Specialized in Expats and International Companies
Amsterdam | Zwolle | Assen
The Netherlands
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VAT In Europe how does is work?
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Introduction of VAT
InvoicePrice excl. VAT € 100,-
VAT 20% € .20,-Price incl. VAT € 120,-
• What is this?• Do you have to charge this?• Can I get it back?
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Entrepreneur A supplies goods and/or services
Entrepreneur A
Supply of goods and/or services
??? B
• Entrepreneur A is obliged to charge VAT on goods/services supplied (EU VAT Rules prescribe this ability).
• The recipient can deduct the VAT if he is an entrepreneur.
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??? B receives an invoice
Entrepreneur A
??? B
€ 120,-
InvoicePrice excl. VAT € 100,-
VAT 20% € .20,-
Price incl. VAT € 120,-
€ 120,-
€ 20,-
€ 100,-
€ 20,-
• Entrepreneur A charges € 120,- (invoice incl. VAT) to B.
• Entrepreneur A pays € 20,- VAT to local Tax Authority
Tax Authority
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Can ??? B reclaim the paid VAT
??? B
InvoicePrice excl. VAT € 100,-
VAT 20% € .20,-
Price incl. VAT € 120,-
If ??? B is an entrepreneur,
he can reclaim the paid € 20,- VAT.
Entrepreneur B
€ 20,-
If ??? B is a private individual (“PI”),
he cannot reclaim the paid € 20,- VAT. .0.. PI
B Tax Authority
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Basic principleVAT Rate 20%
SupplierSupplier
Tax Authority
€ 0
ManufacturerManufacturer€ 40
Sales € 40,- Cost of Goods € 0,-Added Value € 40,- Taxes to be paid € 8,00
€ 8,00
RetailerRetailer€ 60
Sales € 60,- Cost of Goods € 40,-Added Value € 20,- Taxes to be paid € 4,00
€ 4,00 ConsumerConsumer€100
Sales € 100,- Cost of Goods € 60,-Added Value € 40,- Taxes to be paid € 8,00
€ 1208,00
Total added value € 100,-VAT 20% € 20,-
This € 20,- tax is a burden for the consumer. It has been paid indirectly to the tax authority through tax returns and reclaims by the supplier, manufacturer and retailer.
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When does VAT apply
Situation 1United States Europe
Import
Import VAT is due by importer of record
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When does VAT apply
Situation 2 Europe
Intracommunity supply
VAT 0% applies under conditions
The Netherlands Germany
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When does VAT apply?
Situation 3
Local Supply VAT 19%
The Netherlands
AB
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When does VAT apply?Situation 4
United States Europe
Export
0% Export VAT-rate applies under conditions
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When does VAT apply?
Situation 5 Europe
Intra community acquisition
VAT-charge is reversed to recipient, local VAT in country of recipient is due but can be deducted as input again.
The Netherlands Germany
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Pitfalls
• Formal rules for intracommunity supplies and acquisitions are not met
• Distance sales• Incorrect invoices (incorrect reflection of supply
at hand)• Incorrect filing of returns leads to problems• Incorrect (local) VAT rates reported
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Contact
For further information please do not hesitate to contact us:
E-mail: [email protected]: www.mffa.nl
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