Taxpayers who submit their VAT returns monthly must check annually whether or not they are required to pay the December advance for VAT payable on transactions performed during the month of December.
This obligation is only applicable to those submitting their returns monthly, and taxpayers who submit their returns every quarter can thus disregard the measure. The latter group are anyway already obliged to pay an advance on the VAT payable for the fourth calendar quarter.
If a December advance is payable, then the sum must be paid by 23 December 2016 at the latest into the account of the tax authorities. The same payment instructions apply to this as for the monthly VAT payments.
2. How do I determine the sum of the advance?
The taxpayer can choose between two ‘methods’ for determining the sum of the advance payment:
- Either the VAT that is effectively payable for transactions performed between 1 and 20 December is calculated;
- Or the sum of the payable VAT, as stated on the VAT return for November, is taken into account.
The second method is the easiest one, given that it is based on the VAT return for November, which must be submitted no later than on 20 December. The sum stated in section 71 of the November VAT return is thus simply paid twice.
On the other hand, the first method requires that an interim VAT return be compiled for the period between 1 and 20 December, and the advance payment is determined, just like with the normal VAT return, by taking the difference between the payable VAT and the deductible VAT.
3. Can one optimise?
While the first method may require more work, a comparison of the two could be well worth your while. That’s because the method that means a lower advance VAT payment also means an improved cash flow.
The method that is best for each taxpayer depends on their specific situation. Weighing up whether the effort involved in employing the first method is worth the advantage it could provide can also play an important role in this respect.
The December advance that is paid is later set off against that actual VAT payable for the month of December 2016 and can thus be demanded back by an express application for such (using the VAT return), insofar as the conditions for this are fulfilled. This December advance can naturally also be set off against future payable VAT sums.
A VAT credit balance of at least €245 is enough to demand a VAT refund at the end of the calendar year.
4. How do the tax authorities know which method I used?
The tax authorities can see which method the taxpayer used from section 91 of the VAT return for December (to be submitted on 20 January of the following year at the latest).
If the advance payment was determined using the second method – i.e. based on the transactions performed in November – then section 91 must be left blank.
However, if the first method was used – based on the VAT payable for the period between 1 and 20 December – then the sum of the advance payment must be stated in section 91. Moreover, an annexe must be compiled containing the calculation for the December advance payment that must be included when the VAT return for December is submitted.
Please note that, if the first method is used and no advance is payable, then you must state ‘0.00’ in section 91. If you do not do so, the tax authorities will assume that you opted for the second method, and you could lose out if the VAT return for November meant that you owed VAT.
5. What happens if I ‘forget’ to pay an advance?
If the December advance payment is not made or not made in time and/or if section 91 of the VAT return is wrongly filled in or left blank, as a result of which the tax authorities are incorrectly informed of the method employed, this can result in late-payment interest amounting to 0.8% on the sum of the VAT advance payment.