(english is a foreign language to me)
Unrealized VAT seems to be a very interesting feature for reporting financial analysis.
I’m from Portugal and the concept of “unrealized VAT” does not exist on ower tax law. VAT is dued when the invoice is created.
Is there any country on the UE where tax law has this concept of “VAT is dued when payed”? Or is this feature just for better financial management?
Thanks!
Has you said in Portugal isn’t legal to use unrealized VAT. If I’m not in mistake some northern European countries have unrealized VAT. Portugal also has non ductile VAT and some countries don’t have that.
You shouldn’t activated unrealized VAT in Portugal
In Italy when the customer is a governative department - they are known to be very slow in paying even to the goverment itself. Instead of trying to speed their paparwork, they allow vendors to delay VAT payment. [:)]
In Italy you can be allowed to use IVA differita (which is unrealised VAT) on sales e.g. to governmental hospitals etc. as they are know to pay very late. In rest of europe it is normally not used. However in some countries purchase credit vat can only be deducted when approved by the vendor (as I remember this goes for Portugal and Poland) and here you could actually consider to use the functionality for credit purchases only, so VAT is not deducted until “settled” with the customer (e.g. applied to an invoice). France only have some rules that could be applicable in certain cases. Mexico is the only country I know that really use unrealised VAT in general.
If I’m not in mistake this is not valid for Portugal.
I have validated this information with an accountant to be sure, and in Portugal there isn’t any condition that comercial companies can have unrealized VAT.
I don’t know your are referring special condition outside commercial companies, because in Portugal we have several types of chart of accounts. For example we have a chart of accounts for public companies (POCP) for public educational institutions (POCE), etc.
I agree that in Portugal you don’t have normal unrealised VAT. However I have been told from a company that they can only deduct Credit Sales VAT (from sales credit notes) when the customer has “accepted” the credit note by e.g. signing the credit note ??
Every time you post a credit memo it should deduct VAT. But in Portugal a credit memo be 100% legal must be signed customer. Regular procedure is by issuing 2 copies of credit memo. Then customer signs on of them and returns it.
And before it is 100% legal you are actaully not allowed to deduct the VAT in the monthly statement.
And that was just what I meant with sales credit notes could actually be considered some like unrealised until signed by the customer … however I am aware that no companies in Portugal use unrealised VAT for this purpose - it was just an idea and you need to keep track of which credit notes are approved and which not… and if you follow the VAT legislation strict not deduct the VAT before 100% legal
You are right in this point. Unfortunately I don’t see any companies following this rule.