Monthly VAT vs. quarterly VAT. What should I do?
Posted: Tue Dec 17, 2024 5:19 am
As you may already know, the Value Added Tax or VAT is a tax levied on consumption, and self-employed workers and companies are passive tax collectors. This means that when selling a product or service, the tax must be collected, in order to pay it later to the Treasury.
At the same time, the self-employed professional or the company must acquire goods or services that, in turn, are also subject to VAT. The self-employed person or business must balance the VAT paid and the VAT charged to pay the State only what is due and, in some cases, it will be the State that must compensate the business for having paid more VAT than what has been charged.
This balance is reflected in the VAT declaration that is made monthly or quarterly. And at this point, the option that benefits the business must be chosen. Both are presented through form 303.
Quarterly VAT
This is the most convenient option , as it requires less bureaucratic procedures. At the end of the year, an annual summary is also prepared using form 390.
This is the default option for most self-employed workers. The quarterly declaration , which includes all the transactions invoiced in the corresponding quarter (in the case of the Accrual Approach) or the invoices collected and paid in the quarter (in the case of the Cash Approach), can give a positive, negative or null result. A positive result implies that the resulting amount must be paid to the Treasury, and a negative result corresponds to the case in which the Treasury must refund the taxpayer. In the latter case, you can choose to reserve it to offset positive results in future declarations within a period of four years. If the result is null, no liquidation must be made, but the declaration must be submitted.
Monthly VAT
This is the most advisable option for cases where engineering email list the VAT rate applied to sales is lower than the VAT rate applied when purchasing products or services to perform professional work or manufacture the product, and the declaration will often or always be negative. In this way, the business will have greater liquidity , since the VAT is recovered on a monthly basis.
To be eligible for this periodicity, you must register in the Monthly Refund Registry, submitting form 036 electronically, checking box 129.
In addition to submitting Form 303 on a monthly basis, Form 340 for the Informative Declaration of Operations in Registration Books must also be submitted.
Those covered by the monthly VAT refund scheme must also submit the Annual VAT Summary (form 390).
We know that filing VAT returns for a self-employed person can be a daunting task. Sage Invoicing is the simple, unlimited online solution that allows you to manage your business with total control and security.
At the same time, the self-employed professional or the company must acquire goods or services that, in turn, are also subject to VAT. The self-employed person or business must balance the VAT paid and the VAT charged to pay the State only what is due and, in some cases, it will be the State that must compensate the business for having paid more VAT than what has been charged.
This balance is reflected in the VAT declaration that is made monthly or quarterly. And at this point, the option that benefits the business must be chosen. Both are presented through form 303.
Quarterly VAT
This is the most convenient option , as it requires less bureaucratic procedures. At the end of the year, an annual summary is also prepared using form 390.
This is the default option for most self-employed workers. The quarterly declaration , which includes all the transactions invoiced in the corresponding quarter (in the case of the Accrual Approach) or the invoices collected and paid in the quarter (in the case of the Cash Approach), can give a positive, negative or null result. A positive result implies that the resulting amount must be paid to the Treasury, and a negative result corresponds to the case in which the Treasury must refund the taxpayer. In the latter case, you can choose to reserve it to offset positive results in future declarations within a period of four years. If the result is null, no liquidation must be made, but the declaration must be submitted.
Monthly VAT
This is the most advisable option for cases where engineering email list the VAT rate applied to sales is lower than the VAT rate applied when purchasing products or services to perform professional work or manufacture the product, and the declaration will often or always be negative. In this way, the business will have greater liquidity , since the VAT is recovered on a monthly basis.
To be eligible for this periodicity, you must register in the Monthly Refund Registry, submitting form 036 electronically, checking box 129.
In addition to submitting Form 303 on a monthly basis, Form 340 for the Informative Declaration of Operations in Registration Books must also be submitted.
Those covered by the monthly VAT refund scheme must also submit the Annual VAT Summary (form 390).
We know that filing VAT returns for a self-employed person can be a daunting task. Sage Invoicing is the simple, unlimited online solution that allows you to manage your business with total control and security.