The Government Gazette of 17 December 2014 published the new decision Sales tax. Administrative, invoicing and other obligations published. This decision should be mandatory reading for anyone involved in financial accounting.
Following the Stadeco II judgment of the Supreme Court, the passages in the decision on credit invoices have been amended. Those passages start with a reference to Section 37 of the Wet OB, which stipulates that an entrepreneur, who mentions VAT on an invoice, owes that VAT at the moment he issues the invoice. These are obviously situations where that VAT would not otherwise be due, for example:
- because an incorrect rate was applied;
- the supply is exempt from VAT;
- there is a transfer of a generality of assets;
- the collection of VAT should be shifted to the customer.
The purpose of the aforementioned Article 37 is to prevent VAT mentioned on an invoice from being deducted by the recipient of the invoice but not (fully) paid by the issuer of the invoice. The following conditions are therefore imposed on the rectification of an incorrect invoice by the issuer of that invoice:
- the invoice is corrected;
- the risk of losing tax revenue is eliminated.
Correction of invoice can be done by:
- take back the original of the invoice;
- supplement the invoice with an actual credit invoice issued to the recipient of the original invoice.
Eliminating loss of tax revenue can by the issuer of the invoice proving that:
- the recipient of the invoice cannot deduct the VAT;
- the invoice is not and can no longer be used for exercising the right of deduction due to repossession;
- the recipient of the invoice has paid the wrongly or excessively invoiced VAT on return.
Entrepreneurs who have to pay erroneously invoiced VAT may request the Tax Authorities to review this VAT. This may not be processed in the regular period return. A request for revision of wrongly invoiced VAT is processed as an objection or appeal against one's own VAT payment or as a request for an ex officio reduction.
Incidentally, there may of course be other reasons to credit invoices issued. For example, the goods delivered may be taken back in an unused state or the fee may be reduced (e.g. in the context of payment problems on the part of the customer). This is what Section 29(1) of the Turnover Tax Act refers to. Pursuant to that provision, the entrepreneur who issued the invoice and later (partly) credited it may request the Tax Authorities to refund the excess VAT paid. This request (or: this credit note) may also not be processed in the regular period return (or: may not be set off against the turnover of the regular return period).