As a customer, you are out of luck, because you can only reclaim the VAT later on your return. Especially in these difficult times it is important that both parties make good agreements about matters such as the invoice date and payment terms. What is an advantage for one person can be disadvantageous for another. Our advice is to make a good assessment together. For example, we can imagine that a supplier is willing to give a discount if the customer cooperates with a slightly later invoice. From taxfyle you can have the best support in tax submission.
VAT consequences if you cancel debts
If you waive a claim against your debtor, this will have consequences for VAT. If you have already paid the VAT on this claim to the Tax Authorities in an earlier tax return period, you can reclaim the VAT pro rata the amount of remission from the Tax Authorities. Make sure that you can demonstrate what has been agreed with your debtor on the basis of correspondence and the like.
If, as a customer, you do not have to pay part of the claim to your supplier, and you initially (fully) reclaimed the VAT, remember that you must repay part of the VAT to the tax authorities.
Convert purchase debt into loan debt
If the supplier and buyer agree to convert the purchase debt into a loan debt, this will not affect VAT. The purchase debt is thus deemed to have been paid. If the loan debt is not repaid at a later date, then VAT cannot still be claimed on account of irrecoverable debt, and you as a customer do not have to repay already claimed VAT to the tax authorities. If you are wondering what expenses can i deduct as a 1099 contractor then the professional services are essential.
Your customer does not pay
If neither of you makes an agreement, but the claim is (for the time being) not paid, see our article about VAT on bad debts.
Is your customer not paying because of the COVID-19 pandemic? Reclaim the VAT
Unfortunately, every entrepreneur gets or has to deal with it especially now with the COVID-19 pandemic. However understandable it may be at times like now, buyers who do not pay remain one of the major annoyances of entrepreneurship.
Most entrepreneurs have to pay the VAT to the tax authorities in the period that they issue an invoice. If your customer does not pay then, that is double bad luck. The bill will not be paid, but you have already had to pay the VAT to the tax authorities.
When to request a refund?
In connection with the COVID-19 pandemic, an increase in these so-called bad debts is a realistic scenario. It would be nice if the government could be more lenient with the term and could use a quarter instead of a year. Unfortunately, this is not yet part of the current measures taken by the Dutch government.
How to request a refund?
The amount of the refund may simply be processed in your turnover tax return for the period in which the bad debt arose or the 1-year period has expired. You state the amount that you are requesting a refund in section 1a or 1b of the VAT return as negative turnover and VAT.
What if you still get paid after VAT refund
If you have deducted the VAT on a claim in your VAT return and this claim is still being paid in whole or in part, you must state the VAT owed on the part that you have received in your turnover tax return in the declaration period in which you
