Configuring VAT management mode for debits

Definition of VAT on debits

VAT on debits is a method of charging Value Added Tax (VAT) which involves declaring and paying VAT at the time of invoicing for sales of goods or services, regardless of whether the customer has actually paid.

• VAT is due as soon as the standard, advance or progress invoice is issued, whether or not the customer has paid.
• The company is obliged to remit the VAT even if the customer has not yet paid the invoice.

Accounting example of VAT on debits for France :

A company sells a service to a customer on 10 January for 10,000 exclusive of VAT at 20% (2,000 VAT).

• Invoice date: 10 January
• Customer payment date: 25 February
• VAT management method: VAT on debits

Accounting entries in the sales journal at the time of invoicing (10 January) for France:

DATE	ACCOUNT	DESCRIPTION	DEBIT	CREDIT
10/01/20**	411	Customers	12,000
10/01/20**	706	Service Revenue		10,000
10/01/20**	44571	VAT Collected		2,000

• VAT is due and must be declared in January, even if the customer pays in February.
• With VAT on debits, VAT is declared in January, not February.

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Configuring your VAT management mode

Once you have determined your VAT reporting regime from Settings > Invoicing > Invoicing parameters, choose your debit VAT management mode.

Invoicing settings

Vous pouvez personnaliser le libellé affiché sur les documents d’achat et ventes.

The VAT management mode can be defined by default from the invoicing settings, then from each item record, or from a sales or purchase line.

To find out or confirm your VAT management method, please contact your tax office or accountant.

Below you will find documentation on the other VAT management methods available:

Configure VAT on collection management mode

Configuring margin VAT management mode