The accounting process is a bit different for companies that obtain a VAT number. The taxable period is one month, and VAT returns must be submitted to the tax authority (even for the months when there could be nothing to declare) by the 20th day of the month following the taxable period.
In a VAT return (or ‘declaration’), a taxable person (business) gives the tax authorities in the EU country where they are registered information about:
- their taxable (taxed/exempt) transactions;
- the VAT they have charged their customers (output tax) and been charged by their suppliers (input tax);
- the amount of VAT payable (or refundable).
Basically, VAT Return calculates how much VAT a company should pay or be reimbursed.
VAT tax returns can be filed using the e-Tax/e-Customs online environment: VAT declarations on form KMD and an Annex KMD INF listing all sales and purchase invoices with domestic counterparties exceeding EUR 1,000 in one month must be declared on form KMD INF. Supplies of services to VAT-registered customers of other EU Member States must also be declared in the monthly EC sales list due by the 20th of the following month.
In order to file a VAT Return, a company must collect bank statements for all accounts, incoming and outgoing invoices, as they serve as a basis for the declaration itself and must be listed in the annex. Outside of that, companies are obliged to store all invoices electronically for the next 7 years.
Correct submission of VAT returns is highly important as penalties for non-compliance are quite severe. Failure or delay of VAT return submission/payments will result in a maximum penalty of €2,000.
Submission of incorrect VAT return will result in a maximum penalty of €3,200. Deliberate inaccuracies will cost your company a maximum of €32,000. Alongside, there is an interest charged on late payment of VAT due at 0.06% per day.