Many business owners submit their first VAT return for 2017 in April. After all, for the vast majority of business owners, the return period is the calendar quarter.
New legislation
Once you’ve filed your VAT return for the fourth quarter, with all the corrections and adjustments, the one for the first quarter is usually not too difficult. This year, however, you’ll need to take into account the new legislation on unpaid invoices.
With effect from 1 January 2017, the time limit for refunding input VAT has been reduced from 2 to 1 year. There is no transitional arrangement in place for this. You must therefore, in your VAT return for the first quarter of 2017, repay all VAT on invoices issued to you before 1 April 2016, insofar as you have not already paid it.
Incidentally, the one-year period is the latest date by which you must repay the VAT you have deducted. You must do so earlier if:
- you receive a refund from your supplier for an amount you have paid on an invoice;
- it has already been established that you will not be paying the invoice.
Bad debts
If your customers do not pay you, you may reclaim the VAT you have paid to the tax authorities. The time limit for this has also been reduced from 2 to 1 year with effect from 1 January 2017. However, a transitional arrangement applies in this case.
For receivables from debtors existing as at 1 January 2017, the one-year period is deemed to commence on 1 January 2017. You may therefore only claim a refund of the VAT on these receivables in the VAT return for the first quarter of 2018.
You are allowed to claim a VAT refund earlier. However, you must be able to provide convincing evidence that your claim is definitively irrecoverable. The tax authorities set very high standards for this evidence.
VAT return
There is no separate box on the tax return form for VAT to be reclaimed. You may enter the VAT on bad debts relating to the Tax Office, to be included in the VAT return as follows (as appropriate):
- deductible VAT (in question 5b; input VAT)
- negative turnover (for question 1a or 1b)
Naturally, your records must show how you calculated the amounts included in your VAT return.