If you are an employee, one of your main concerns will probably be all the “paperwork” related to VAT. Especially when it comes to deducting input VAT on invoices for the expenses you need to carry out your activity.
When do I have to declare it, how do I justify my expenses and, above all, when do I have to declare it?, what is and is not subject to VAT. I'm sure you've asked yourself some of these questions... If so, read on!
Value Added Tax (VAT) is an indirect tax that is levied on consumption and therefore falls on the final consumer.
If you are self-employed or an SME, you will have to pay the difference between the VAT you have charged and collected from your customers and the VAT you have borne on your purchases from suppliers to the tax authorities. If the input VAT is higher than the output VAT, you can apply for a refund of the difference in your favour.
VAT-exempt activities
This exercise, as you know, is done on a quarterly and annual basis. However, to ensure that everything is in order, you should bear in mind that in order to be able to deduct your expenses you must meet the following requirements:
Once you have all of the above under control, you should also bear in mind that there are activities that are exempt from VAT. All of them are covered by the Law 37/1992 of the Value Added Tax in its article 20:
When you acquire any of these goods, you will be exempt from paying VAT. Therefore, you will not have to include it in your quarterly or annual tax return.
VAT is undoubtedly one of the most complicated taxes to understand and also one of the most persecuted by the Tax Agency. So be well informed so that you don't overpay or underpay.
