For many business owners, the final VAT return period is already underway. For that period, it is necessary to check whether the BUA applies.
BUA
The BUA is the Sales tax deduction exclusion order. Under this decision, VAT charged to a VAT-registered business in respect of goods and services used for the following purposes is not deductible:
- maintaining a certain state;
- giving promotional gifts or presents to persons not entitled to tax relief;
- the provision of wages in kind to staff.
Under the BUA system, VAT on potential BUA supplies is deducted during the course of the year (provided, of course, that the VAT-registered trader carries out VAT-taxable supplies). Subsequently, a correction must be made in the final periodic return (the return for December or the fourth quarter) if and to the extent that the BUA applies.
Threshold
For the sake of efficiency, the BUA has a threshold of €227. If the total acquisition or production costs (excluding VAT) of the benefits in kind provided to a related party do not exceed €227, the BUA adjustment will not be applied in the final tax return period.
When calculating whether the threshold is exceeded in a calendar year, the personal contribution paid by the interested party may be deducted from the acquisition or production costs. This is stated on the Tax and Customs Administration’s website. However, this rule does not appear in the BUA at all. Consequently, this (incorrect) interpretation will be discontinued with effect from 1 January 2024 (this is laid down in a decision). The tax return for the fourth quarter of 2023, which must be submitted in January 2024, is therefore the last in which the netting-off may be applied.