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!
Let's remember that Value Added Tax (VAT) is an indirect tax that taxes consumption and therefore falls on the final consumer.
If you are self-employed or a small to medium-sized enterprise (SME), you will need to pay the difference between the VAT you have charged and collected from your clients, and the VAT you have incurred on purchases from suppliers, to the tax authorities. If the VAT incurred is greater than the VAT charged, you can claim a refund of the difference in your favour.
VAT-exempt activities
This exercise, as you know, is carried out quarterly and annually. However, you should bear in mind, to ensure everything is in order, that to be able to deduct your expenses you must meet the following requirements:
Once you have mastered all of the above, you should also consider that there are activities that are exempt from VAT. All of them are included in the Law 37/1992 of Value Added Tax in its article 20. And they are not few:
When you purchase any of these goods, you will be exempt from paying VAT. Therefore, you will not need to include it in your quarterly or annual tax return either.
VAT is, without a doubt, one of the most complex taxes to understand and also one of the most pursued by the Tax Agency. So make sure you are well informed to avoid paying too much, or too little.
