Visma.net ERP
About recognising the pending VAT on payments
In certain countries, there are legal requirements that VAT must be recognised, accrued, and included in the VAT report at the time of payment.
To satisfy these requirements, in Visma.net ERP,
you can use the On payment VAT recognition method.
With this method, you recognise VAT
amounts based on the payments applied to documents, so the VAT amount of a document is
recognised on the date when the payment was applied to that document.
You can recognise the VAT amount fully or partially, depending on whether the payments
completely or partially cover the amount of the document.
If the document is paid partially, the
VAT amount to be recognised is calculated proportionally to the applied payment.
Example of general ledger transactions generated when partial payment has been
applied
This section provides an example of the general ledger transactions that the system generates when a partial payment has been applied and recognised.
Suppose your company issues a €1000 invoice dated 01.01.2020 for services.
The services are
subject to a 7% VAT, which should be recognised after the payment is received.
When this invoice
is recorded in the system, the system creates the following entries in the General ledger.
| Account | Date | Debit | Credit |
|---|---|---|---|
| Customer ledger | 01.01.2020 | 1070 | - |
| Pending VAT payable | 01.01.2020 | - | 70 |
| Services | 01.01.2020 | - | 1000 |
On 20.1.2020, the customer pays €535, which is half of the amount it must pay for the
services plus the €35 VAT amount (7% of €500).
This VAT amount must be recognised and posted to
the General ledger once this payment is processed.
As a result, the system creates the following
entries in the General ledger.
| Account | Date | Debit | Credit |
|---|---|---|---|
| Pending VAT payable | 20.1.2020 | 35 | - |
| VAT payable | 20.1.2020 | 35 |
The VAT report that is generated at the end of the period, on 31.1.2020, will include €35 of output VAT and €535 of taxable sales.
Parent topic:Recognition of pending VAT - overview
Related concepts
About VAT and its variations
Related tasks
Create a VAT
