The final VAT return for 2014 must be submitted in January 2015. This is the return for the fourth quarter or for December 2014. The final VAT return of the year requires your special attention.
For example, the correction for the private use of the company car is included in the calculation. The general rule is that this is calculated on the basis of the actual private mileage (including commuting mileage), but in most cases a standard rate is applied. This means that 2.7% of the car’s list price is declared as private use (2.7% becomes 1.5% if no VAT was deducted when the car was purchased and from the fifth year following the year in which the business owner started using the car).
A number of test cases concerning the adjustment for the private use of a company car are still pending before the tax court. Business owners who wish to benefit from a favourable outcome in these cases must safeguard their rights by lodging a (pro forma) objection in good time. An objection is deemed to have been lodged in good time if it is submitted within 6 weeks of the VAT being paid (or within 6 weeks of the date of the decision concerning a VAT refund).
If an objection has been lodged against the VAT return for 2011, 2012 or 2013 (in many cases by the tax adviser, via the collective scheme), this automatically also counts as an objection to the 2014 return.
The latest VAT return also includes any corrections resulting from the BUA. That abbreviation stands for: Sales tax deduction exclusion order. The VAT deduction on benefits in kind provided to employees must be reviewed, except where the total value of such benefits does not exceed €227 over the course of the year. The BUA has a specific scheme for benefits in kind provided via a (company) canteen.
Businesses that do not carry out exclusively VAT-taxable supplies must declare the final deduction in their final return of the year under the pro rata scheme determine. In principle, this should be done on the basis of the ratio between turnover subject to VAT and total turnover.
Where these entrepreneurs have invested in movable or immovable business assets over the past 5 or 10 years, the review scheme may apply.
Apart from the VAT return, a tenant who rents property subject to VAT must check at the end of the year whether they have used the rented property for 90% (sometimes 70%) for transactions in respect of which there was a right to deduct VAT. If this was not the case in 2014, this must be reported by 29 January 2015 by means of a declaration to the landlord and to the tax authorities. Failure to meet the 90%/70% requirement may result in the property no longer being let subject to VAT.
Businesses that acquired property in 2013 with the option of a VAT-charged supply must declare, by 28 January 2015 at the latest, that they have used the property for 90% (or 70%) for services in respect of which they were entitled to a VAT deduction.
Because the final VAT return for a year contains a number of “corrections”, there is sometimes a misconception that all discrepancies throughout the year can be smoothed out. Unfortunately, this is not the case. Errors with a net VAT impact of up to €1,000 in total may be included in the VAT return for the following return period (this applies to every return period, incidentally). If the total VAT amount involved is higher, the correction must not be included in the regular return; instead, a supplementary return must be submitted.
For a number of years now, businesses have been obliged to submit a supplementary return as soon as it becomes clear that an incorrect amount of VAT has been paid or claimed back. Failure to comply with this obligation, or failure to do so in a timely manner, will result in the imposition of an administrative fine.