The last VAT return of the year will always take longer, because this year’s VAT corrections must be processed. What should you take into account in the last VAT return 2021 and the first VAT return 2022?
During the year, you deduct VAT in your VAT return. VAT adjustments must be made at the end of the financial year. These are the following VAT corrections:
- private use of the company’s goods by the entrepreneur and services provided by the entrepreneur for his own private purposes;
- private use car;
- provisions for relationships and staff;
- audit of input VAT deductions for mixed use for taxed transactions and for exempt and other untaxed transactions.
Correction of VAT for withdrawals for own consumption and private use
Every year, the tax authorities publish standard amounts for the private part of the costs of energy and water and of own use of agricultural products. A VAT adjustment must be made in the last VAT return for 2021 for private use of energy and water as well as use of agricultural products. The agricultural standards 2021 state which price (excl. VAT) is to be used per. product and for which the VAT adjustment is to be calculated at the end of the financial year. These amounts also apply to SMEs. State a VAT correction in question 1d.
Correction VAT for private use of car
VAT must be paid for private use of company car. In the absence of a mileage administration and in the absence of a business fee, the VAT due is set at a flat rate of 2.7 percent of the car’s catalog value (including VAT and BPM). At the end of the financial year, the correction for the car is stated on the basis of the fixed amount in question 1d in the VAT return. If VAT was not deducted when buying the car – for example because the car was bought under the profit scheme or is invested in the company by private capital – a fixed surcharge of 1.5 percent applies. The flat rate of 1.5% also applies to cars that the entrepreneur or employer still uses after the fourth year after the year in which he started using the car. If a kilometer administration has been carried out, the correction for VAT due to private use is set to the outcome of the following sum: private kilometers / kilometers in total x less VAT on maintenance and use.
State this correction in question 1d of the VAT return. If a personal contribution is paid for private use of the car, this must be stated in question 1a of the VAT return.
Some points to note in connection with the VAT regulation for private car use:
- If a car is private property for a DGA, and the costs of maintenance and use are kept private, while the DGA is reimbursed 19 øre per. be made.
- The entrepreneur, who is not DGA, for whom the car is private property, can refund VAT on maintenance and use expenses. At the end of the year, a correction must be made for private VAT in the case of private use.
- Commuting is private use for VAT purposes. If commuting is the only private use of the car, it is not necessary to keep a balanced mileage administration to determine the VAT due. This can be based on a fixed number of 214 working days per year.
- It is not easy to determine what a normal personal contribution is for private use of a car. Our position is that the normal value of the private use of the car can be set at 2.7 percent (or 1.5% for cars older than 5 years) of the catalog value (including VAT and BPM). Assume that the catalog value of a three-year-old car is 50,000 euros and a personal contribution of 1,800 euros is paid on an annual basis, the personal contribution is higher than the so-called minimum personal contribution of 1,350 euros (2.7% x 50,000) . On an annual basis, VAT must be paid at 312 euros (21 / 121e x 1,800).
- Unlike for income tax / payroll tax, there is no special VAT scheme for electric cars and cars older than 15 years.
- The correction VAT for private use of a car must not be included in the BUA calculation. The private use of a commercial bicycle must be included in the BUA calculation.
VAT correction for provisions for relationships and staff
Will there be private benefits for relationships and staff in 2021? In that case, be aware of the application of the Decree on the Exclusion of Deduction for Sales Tax (BUA). If the benefits per. person has a value of more than 227 euros excluding VAT on an annual basis, the VAT deducted from this in 2021 must be corrected in the last VAT return in 2021. Always keep a calculation for BUA in the administration. The VAT to be corrected must be stated in question 5b of the VAT return.
NB: the VAT adjustments due to private use are included as costs.
Correction (before) pro rata VAT and recalculation and revision of VAT
When an entrepreneur performs both exempt and VAT-taxed services, a turnover rate must be determined. There is a right to deduct VAT for that part of the taxed services. The ratio based on the pro-rata percentage can be used.
If an entrepreneur has previously purchased movable or immovable property and has fully or partially deducted the VAT for this purchase, then the VAT must be revised in the event of a change of use of the property in question. This audit must be stated in the last VAT return for the financial year and may result in a refund or payment to the tax authorities. The review deadline for real estate is ten years, for movables it is five years. The VAT correction in connection with recalculation and revision must appear from the VAT return under question 5b.
NB: In connection with the corona, there is a good chance that during 2021 there will be a different pro rata than when the investment was made.
The first VAT return 2022
In the first return in a year, you include the following settlements for the previous year:
- Request for reimbursement in connection with annual globalization using the margin scheme (per calendar year). The digital VAT return does not have a separate section for this. Therefore, according to the tax authorities, the request must be made in writing to the relevant tax office;
- Recalculation after application of the standard calculation method I (per financial year).
VAT and profit margin
A retailer of marginal goods and a travel agency (including the tour operator) that determines the profit on the basis of globalization per. period, after the end of the financial year 2021 must balance the profit margin for all declaration periods and determine the annual balance sheet (the annual profit margin). This may show that less VAT is to be paid than the dealer / travel agent paid on the declaration in 2021. The dealer / travel agency may, upon written request, request a refund of the excess VAT paid in the first declaration period after 2021. is requested to set the annual profit margin to minus. amount. This negative annual profit margin can then be set off against the positive annual profit margin in 2022.
VAT and standard calculation method
At the end of a financial year, the VAT due for the entire year must be recalculated. The store values of all purchases up to and including that period are assumed in the different periods. The recalculation is based on the retail values for the purchases sold during the year (initial stock + purchase – / – final stock). Private use should also be considered at the end of the year.
If, after the recalculation, it turns out that too little has been declared, the balance must be declared for question 1c in the first report of the following financial year.
If an entrepreneur has declared too much in balance, he can request reimbursement of the deductible. The VAT return no longer has a separate section. The request for repayment can be made in a separate letter or in the supplementary declaration, which is usually submitted at the end of a year.
Inform timely VAT to be paid for old years, via a supplementary declaration
Is there still a VAT debt for 2020 or older on the balance sheet? Report this VAT debt to the tax authorities as soon as possible using a ‘VAT surcharge’. That way, you prevent interest rates and fines from rising further. The surcharge must be made before the entrepreneur should know or reasonably assume that the tax authorities are aware of or will become aware of the relevant inaccuracy or incompleteness. If the entrepreneur submits a supplementary declaration in time, he will only receive a default fine for not paying the VAT due or not paying it on time. This timely grant is referred to as a “voluntary improvement.” Inclusion in the annual accounts of the VAT debt with explanatory notes is not considered a voluntary improvement. If it is determined, the tax authorities will impose an additional assessment, which does not exclude a fine of 50 percent (intentionally). It is therefore important that the supplementary statement is submitted before the tax return is submitted.
In the case of a voluntary improvement, the fine is 5 percent with a maximum of 5,514 euros. If the amount of VAT payable as a result of the surcharge does not exceed EUR 20,000 or 10% of the VAT previously paid or received back in balance for the period in question, no fine shall be imposed. The tax authorities can impose an additional infringement fine (maximum 100%) if the entrepreneur does not (in time) comply with his duty to provide information. In other words, if no additional declaration is made in the event of an established inaccuracy stated on the balance sheet, a fine of up to 100 percent can be imposed! This negligence fine is therefore in addition to the default or negligence fine for late or underpayment of VAT. If the supplement is made later than three months after the end of the financial year to which the supplement relates, tax interest is calculated.
Corrections of EUR 1,000 or less in VAT to be refunded or VAT to be paid do not have to be submitted via a VAT surcharge, but can be declared via the next VAT return.
Author: Carola van Vilsteren
This article was published in cm: 2021, edition 9.
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