When you give a gift to your customers or other relationships, for example in the form of end of year gifts, the value of the gift will be decisive in determining whether VAT is deductible from the purchase or not.
- If the gift cost more than 50 EUR (excluding VAT), then VAT will not be deductible, if the cost is lower, then VAT can be fully deducted.
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For the promotional
Promotional items, such as gadgets, that you donate to promote your business are fully deductible. They must also have minimal value (so do not exaggerate) and not be consumer goods (wine, pralines, etc.). In addition, they must clearly display the name and logo of the company. This applies to items such as pens, umbrellas, notepads, etc. Using the tax refund estimate is essential there.
Cars are often used as a sign for a business. Both the VAT and the tax authorities have recently addressed this aspect so that the costs of advertising are fully deductible. The remaining costs relating to the car, such as maintenance costs, remain deductible to a limited extent for VAT services, namely a maximum of 50%.
The invoice is essential
In order to be able to exercise your right to the deduction, you must have a “regular” invoice, this is an invoice on which all the information relating to legal obligations appears.
- In a circular dated October 12, 2017, the tax authorities are in favor of agreeing to a VAT deduction according to the principle of “substance over form”, as established by the European Court. Therefore, irregular invoices do not preclude the deduction.
- When your supplier gives you the invoice on time, you can usually reclaim the VAT directly on the next VAT return. An invoice is considered to have arrived “on time” by the legislation relating to VAT if it has been delivered no later than the fifth working day of the month following the month in which the VAT became due.
If you do not receive a regular invoice “on time” (as is often the case), luckily you can always exercise your right to the deduction later. However, the invoice must arrive at the latest before the end of the third calendar year following the year in which the VAT to be recovered is due.
“VAT” is an abbreviation well known to self-employed people and accountants. If you are in an economic activity for which your customers pay you, there is a good chance that you are subject to VAT. When are you subject to VAT? And what exactly is it? You will find all the details here.
What is VAT liability?
Quick reminder: VAT (value added tax) is the tax you have to pay when you buy goods or services. As a self-employed person, you are usually required to charge this tax to your clients and remit it to the state. This is not the case for all entrepreneurs, however, as some are exempt from VAT.