Big changes to VAT
What is VAT?
VAT (Value Added Tax) is based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services bought and sold for use or consumption.
As of the 1st of January 2023, VAT will become payable upon receipt of prepayments for the supply of goods and no longer when the transaction occurs. This is all as a result for the finance act of 2022.
Currently, VAT on the supply of goods is normally payable by the seller at the time of completion of the transaction, regardless of whether a deposit has been paid by the customer.
This will all change on the 1st of January 2023 when VAT will be payable as soon as the amount is received, and no longer when the transaction occurs.
A consequence of this will be the introduction of deposits by many organizations. VAT will become due upon the receipt of down payments/deposits, up to the amount received with an exception in special cases. On the other hand, in the absence of a down payment/deposit, VAT on the supply of goods will still remain.
The client company will only be able to deduct VAT on transaction when the tax is due from the seller, and provided that the other conditions for the right to deduct are met. One of these conditions being,
- possession of an invoice declaring the VAT.
This new rule should also allow customers to deduct VAT on their purchases of goods earlier than before.
If you wish to find out more, do not hesitate to contact us via telephone
+33 (0) 1 53 93 94 20 or by mail at [email protected]. Our team of experts will happily assist you with any queries you might have.
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