This page describes the processing of value added tax (VAT) in Procountor. Procountor generates a VAT summary each month, based on VAT-bearing receipts saved in the program. The value added tax information reported on tax return for self-assessed taxes is compiled in the VAT summary.
Essential functions concerning VAT
The essential functions concerning value added tax in Procountor are the following:
The VAT debt accumulated from each month’s receipts is calculated in VAT summary. VAT summary accounting entries are single sided, and all receipts related to the summary constitute the reversing entry. Once the VAT summary has been generated, the result of accounting reports and the balance sheet should balance until the end of the target month. If the target month’s information change after the generation of the VAT summary (e.g. due to the entering of a new invoice or the approval of an unfinished one), a new VAT summary must be created for the period.
A separate VAT summary must be created for each month even if an extended (3 or 12 months) tax return period is in use.
More information about VAT summary is available here.
Self-assessed tax return
Self-assessed taxes, such as value added tax, is reported to the Finnish Tax Administration on a tax return for self-assessed taxes. The report of self-assessed tax return can be created, send and paid in Procountor. In order to stay on schedule with tax reporting and tax payments, it is recommended to check the important dates concerning your company or institution from the website of the Finnish Tax Administration.
Before the income register launched, also the information on employer’s contributions were reported with the self-assessed tax return. From the beginning of 2019, salary reporting is done with the Earnings payment report and the Employer’s separate report.
More information about self-assessed tax return is available here.
VAT EU Recapitulative Statement
If a company does business in the European Union, the company has to report its intra-community sales of goods and services on the VAT EU Recapitulative Statement. The Finnish Tax Administration (in Finnish) offers detailed examples concerning the intra-community trade. It is useful to examine these examples from the perspective of your own specific business; is the VAT EU Recapitulative Statement required with certain business situations?
The information reported on the VAT EU Recapitulative Statement is compiled from the accounting of sales invoices entered as business transactions in Procountor with VAT statuses related to EU sales. The VAT status of a journal can be set to EU sale, and the journal will then be included on the VAT summary notification, but this is not possible on the accounting pages of bank statements or reference transactions.
More information about VAT EU Recapitulative Statement here.
The VAT processing model
The VAT processing model in Procountor differs from the model in traditional accounting software. The following image presents the value added tax processing model of Procountor in a simplified manner:
VAT entry chain
VAT information related to receipts and entries are specified on the receipt’s accounting page. The VAT debt accumulated from each month’s receipts is calculated and entered on the ledger account 2930 VAT liability.
VAT summary is always dated to the last day of the month in question. After the VAT summary has been generated, the income sheet and balance sheet accounts should be in balance until the end of the month in question.
Below is an example of the entry chain for VAT and the related entries in Procountor:
- 5.6.20XX – Company sends a sales invoice: 1 000 € + VAT 24 %
- 15.6.20XX – Customer’s payment appears on the company’s reference material and bank statement: 1 240 €
- 20.6.20XX – Company receives a purchase invoice: 200 € + VAT 24 %
- 25.6.20XX – Company pays the purchase invoice and a payment appears on bank statement: 248 €
- 30.6.20XX – Company generates the VAT summary, calculating the VAT debt: 240 € - 48 € = 192 €
- 12.8.20XX – Company generates the tax return for self-assessed taxes, transferring the VAT debt to Tax Account Online debt: 192 €
- 12.8.20XX – Company pays the tax return for self-assessed taxes and a payment appears on bank statement: 192 €
If the bank statement includes a payment with the description ”Return from Tax Account Online”, the program will recognize the transaction and automatically enter it on the Tax Account Online transactions account specified in Taxation information.
VAT on the accounting pages of receipts
In Procountor, the following receipt types can include payable or deductible VAT:
- Sales VAT:
- Sales invoice
- Reference payment
- Journal receipt (when VAT type of the entry is "Sales")
- Bank statement (when VAT type of the entry is "Sales")
- Purchase VAT:
- Purchase invoice
- Travel and expense invoice
- Journal receipt (when VAT type of the entry is "Purchase")
- Bank statement (when VAT type of the entry is "Purchase")
VAT information for the receipts and entries related to them can be specified on the accounting pages of these receipt types.
VAT processing is guided by the following factors:
- Accounting date: the accounting date selected for the receipt determines the month on which VAT summary and tax return for self-assessed taxes the receipt’s information will be included. By default, the accounting / receipt date will be the invoice date, but the date can be changed in the Accounting-view if needed.
- VAT percentage: The VAT percentage determines the tax rate that applies to a domestic sale or purchase. The entry’s VAT value is calculated automatically from the accounting value and the selected VAT percentage. A VAT percentage can only be selected for actual entries, not for reversing entries (e.g. sales receivables on sales invoices) or reconciliation difference rows.
- VAT deduction percentage: The VAT deduction percentage determines the deductible percentage of purchase VAT. This data item can only be selected for receipt types that include purchase VAT. The default VAT deduction percentage is determined in Management > Accounting info > VAT defaults.
- VAT type: There are two VAT types, Sales and Purchase. The VAT type of a sales invoice is always Sales, correspondingly the VAT type of a purchase invoice is always Purchase. The VAT type can’t be changed. However, with Journal receipts the VAT type can be chosen freely for the whole receipt or just for a single entry. If there is a separate VAT type -setting on a single entry, it overrides the VAT type set for the whole receipt for that specific single entry.
- VAT status: VAT status is a key control data item for VAT processing in Procountor. The selected VAT status specifies the type of VAT processing related to the receipt or entry. The default VAT status for domestic transactions is "Domestic”. For example, various different VAT statuses that guide data into the correct sections of the tax return for self-assessed taxes are related to EU trade. This data item is mandatory at the receipt header level and optional for entries. If a VAT status has been selected for an entry, it will override the VAT status selected at the header level.
Sending tax return for self-assessed taxes and VAT EU Recapitulative Statements requires using ApitamoPKI interface. Further information about ApitamoPKi interface and the certificate that is needed in order to use the interface can be found here.
Because there are a lot of different VAT statuses, it is useful to define the VAT statuses that are actually in use. This is done in the VAT defaults settings. After determining the used VAT statuses, only the defined statuses will show as an option when creating receipts and invoices.
It is useful to determine default statuses for certain products and business partners in the registers of Products and Business partners. After doing so, the VAT status on an invoice derives automatically from the registers, and it doesn’t have to be entered on the invoice manually every time repeatedly.