THE VAT LIABILITY ON DEPOSITS CHANGES AS FROM 1ST JANUARY 2023!

As a reminder, the rule applicable until the end of December 2022:
– Advance payment for services: WITH VAT
– Advance payment on supplies of goods : WITHOUT VAT

Indeed, VAT on goods is normally due at the time of supply irrespective of any financial terms negotiated between the buyer and the seller. Consequently, advance payments on goods were previously invoiced without VAT.
As from now on, VAT on deposits will be payable upon receipt of the deposit, irrespective of the underlying transaction (supply of services or goods).

In other words, as of 1 January 2023, all invoices for deposits will have to include VAT.

In order to prepare for this, it will be necessary, on the seller’s side, to set up your information systems to include VAT on all your progress invoices and to pay the VAT to the Treasury when they are collected. In fact, the pro forma invoices for calls for funds will be replaced by firm and definitive invoices for deposits with VAT.

On the buyer’s side, the VAT mentioned on the deposit invoice will be immediately deductible. And, in case of intra-community acquisitions, the VAT will now have to be self-cleared upon receipt of the progress invoice.

Moreover, these provisions will also have to be included in contracts concluded from this date. For contracts concluded before this date, it will be necessary to look at the terms and conditions that had been fixed, as this new rule also applies to these contracts.

Our teams remain, of course, at your disposal for any further information you may require on this subject.