Value Added Tax (VAT) is money due to or refundable from the Dutch tax office. Have you done the VAT check?
What is a VAT check?
Regular companies have a quarterly VAT obligation. That implies that the Q4 or last quarter of any year is to be filed and paid in the month of January following the financial year. This amount is also showing on your company balance.
The balance amount and the amount in the Q4 VAT return should be identical.
The VAT check implies that you check that the balance amount of the VAT position is in line with actual VAT return filed. Maybe logical and simple to you that if you are due EUR 100 VAT to the tax office that the balance shows a EUR 100 VAT liability. However, often the amount is not identical.
VAT check: why a difference
The difference between the VAT return and the VAT amount showing on the balance can have all kind of reasons. For instance the client brings receipts of earlier VAT quarters that are processed, but not accounted for. Or outstanding turnover (debtors) are provided after the VAT return was filed. The bookkeeper can have made changes to the bookkeeping that were not shown in the VAT return. Or you are doing your books yourself because everybody tells you there are plenty of apps that can do this for you, but you have no clue what you actually have done.
We have a VAT difference, what should we do?
If the VAT difference between the balance and the filed final VAT return, then a correction or suppletie VAT return is to be filed with the Dutch tax office. We learned the hard way that as long as the correction VAT does not exceed EUR 20.000 in additional VAT to be paid, no penalty is issued.
Should we file a correction VAT return?
This is exactly why this article is being written – should we file a correction VAT return? Yes you should, or better stated, you are obliged to. The Dutch tax office has the opinion that all tax payers are human beings that can make a mistake. So never filing a VAT correction the tax office finds more strange than once in a while filing for a correction.
If you do not file the correction, than the Dutch tax office computer will do it for you. They check the last VAT return with the balance position of the VAT. If there is a difference exceeding EUR 1 you receive a letter. The tax office is strong in its opinion that money due to them is a fraudulent action if you never made the correction. Hence a penalty is to be expected if they find out before you made the correction.
Even though we have the opinion tax is exciting, having issues with the Dutch tax office is less exciting. Especially because you, or your bookkeeper, forgot or was not aware a VAT check would have resulted in a correction to be made. Hence it is key to have the balance in line with the final VAT return filed, or if that is not the case to make the VAT correction as soon as you can.