There is another exception to the deductibility of VAT on accommodation costs: the accommodation costs of security personnel, guarding and surveillance of company premises. VAT on these housing expenses is deductible.
Applying for VAT recovery is necessary
The deductible VAT recovered by your company allows you to reduce the amount of VAT that you have to pay back to the State. Better, if your deductible VAT is higher than your collected VAT , you get a VAT credit which you can request reimbursement from the tax authorities.
- In this case, the VAT recovery is not automatic and must be the subject of a request for reimbursement of the costs incurred.
- Rather than requesting a refund of your VAT to be recovered, you can wait for your next VAT tax returns showing a balance to be paid, and use your VAT credit to reduce what you pay back to the State.
- Be careful to record the non-deductible VAT accurately in order to avoid claiming the reimbursement of an excessively large VAT credit. You will thus avoid an adjustment by URSSAF and will be able to recover your VAT credit without problems.
All your business expenses must be fully justified
To obtain a VAT credit or even simply to reduce the VAT that you must pay to the State, it is imperative that all business expenses allowing VAT deductions are fully justified (original invoice, sales receipt, etc.).
To be able to recover the deductible VAT on certain travel expenses, meal expenses, transport costs or others, your employees must provide you with an expense report filled in precisely and accompanied by a supporting document mentioning the applicable VAT rates paid. Using the tax refund estimate is essential there.
You will also need to set up a clear, precise and well-explained business expenses policy to your employees.
The switch to VAT involves many changes in the daily administrative and accounting of the self-employed professional. You will need to apply for a VAT registration number, complete VAT returns and adapt invoices and quotes to your new situation. The Gest4U accounting software presents all the changes to take into account and the procedures that you will now have to complete.
When do I start declaring VAT?
You must declare VAT as soon as your turnover exceeds the thresholds for the VAT-based exemption:
Services: from € 33,200 in turnover (tolerance threshold € 35,200)
Commercial activities and hosting services: turnover from € 82,800 (tolerance threshold € 91,200)
Since January 1, 2018, you can declare VAT by being in the micro-enterprise regime. It is important to note for micro-entrepreneurs, that declaring VAT for two consecutive years causes an immediate exit from the micro-enterprise regime (switch to the real regime).
You must start declaring VAT from the first day of the first month of exceeding the thresholds of the deductible based on VAT (or subscription to the option for the payment of value added tax).