This a guide on how to generate a VAT summary, which is an integral part of VAT processing in Procountor. More about VAT processing in Procountor can be found here. VAT summary is a tool for calculating VAT from the receipts in Procountor to be reported the tax authority with the Tax return for self-assessed taxes.
The monthly VAT summary books the value added tax debt (calculated on the basis of Income statement transactions) to the balance. The summary consists of all the value added taxes on all business transactions of the target month. The VAT summary must be generated for each month even if an extended (3 or 12 months) tax return period is used.
Generating a VAT summary
VAT summary is generated in Accounting > VAT summary.
1. Before generating the summary, choose the target year from the Target year drop-down menu. After selecting the year, click the Create VAT summary.
Target year drop-down menu includes the current year and previous years. Every year appears for selection on the first day of each year: for example, year 2021 is available in the menu on 1.1.2021. Therefore, the year 2021 can't be chosen when the previous year hasn't fully passed yet, for example, on 31.12.2020.
2. Clicking the button opens a new window that prompts to select the target month from the Target month drop-down menu. After choosing the correct month, click Continue.
As a default, the program offers here the earliest month with transactions containing VAT that have not yet been included in VAT summaries or invoices that have been modified after generating the VAT summary.
If the target month contains unfinished invoices (that will therefore not be included on the summary) the program gives a warning and a list of all these invoices after clicking Continue.
If, for example, a sales or a purchase invoice has accidentally been left Unfinished, this gives an opportunity to approve that invoice and remove it from unfinished transactions and include it on that month’s VAT summary. If, however, these invoices are not meant to be included on the VAT summary in the first place, this warning can be ignored, and the VAT summary generated by clicking OK.
3. After selecting the target month and clicking Continue, the VAT summary is generated for the selected month. The program also automatically numbers the summary.
The Transaction information of the VAT summary shows the details of the generated summary. Calculate summary button gives a rundown of the month’s VAT sums that consists of VAT debts of purchases and VAT receivables of sales. The summary is automatically saved after it has been generated. Any changes made on the summary can be saved by clicking Save.
Accounting value column of the Transaction information section includes values only from accounting entries with the VAT status of "Domestic" (either sales or purchases) that have VAT percentage other than zero. In other words, no other VAT status rows include the actual VAT amounts in the VAT summary view – instead, the VAT amounts can be seen in the fields of the tax return for self-assessed taxes.
The Search information button opens a Summary of transactions for VAT information window. This makes keeping track of VAT debts and receivables easier. Search all transactions option shows all the transactions the summary consists of.
After the summary has been generated, the summary will be shown on VAT summary view's VAT summary listing. Selecting a summary from the list (by activating its row) and clicking View, or the summary number, opens the Accounting view of the summary.
4. If tracking periods are used, the tracking period for that particular month should be closed once the VAT summary has been created to prevent changes being made on the invoices that would affect VAT. More information on tracking periods here.
VAT summary accounting
The program automatically generates an accounting page for the VAT summary and dates the page to the last day of the target month. For example, the VAT summary for March will be dated March 31. VAT summary accounting will enter the VAT debt accrued from the month’s receipts on ledger account 2930 (VAT liability).
VAT summary accounting entries are single sided, and all receipts related to the summary make up the reversing entry. Once the VAT summary has been saved and an entry on account has been created on its accounting page, the result of accounting reports' income statement and balance sheet should balance until the end of the target month.
The sums or account cannot be changed manually on the VAT summary accounting page. The only data that can be modified are notes, date/entry period and transactions description.
The VAT calculation entries can be inspected on General ledger. Any changes made to accounting right before creating the report will be included on this report.
Special cases
The following things should be taken into consideration when generating the VAT summary:
- If any changes are made on invoices in the target month, the VAT summary needs to re-generated. Get modified receipts button on the VAT summary page brings up all the invoices modified or created after the VAT summary for that month has been generated.
- If a tax return for self-assessed taxes has not yet been made, the summary can be updated or invalidated.
- To update an unreported summary, generate a new summary for the same target month. In this case the program does not generate a new summary but will update the information on the previous VAT summary that has not yet been reported.
- To invalidate a VAT summary, select the VAT summary and click Invalidate at the top of the page. Previously invalidated summaries are shown by clicking Show invalidated.
- A VAT summary that has already been reported on the Tax return for self-assessed taxes, it cannot be edited or invalidated. Any necessary changes must be made by generating a new VAT summary and a new Tax return for self-assessed taxes.
Generating a VAT summary before the end of the month
A VAT summary can also be generated during the target month if you wish to calculate the current VAT debt for purposes such as reviewing the balance sheet. The summary can then be invalidated or updated later with new figures, as long as the information has not been reported to the tax authorities with the Tax return for self-assessed taxes.
Generating a new summary for the same month
If new invoices including VAT are entered for the month, or changes are made to existing invoices after the VAT summary has been generated, a new VAT summary must be generated for that month. The summary is generated, as usual, by clicking the Create VAT summary button.
Procountor generates the new VAT summary in one of the following ways, depending on the status of the existing VAT summary:
- If only an invalidated VAT summary exists for the month in question, a new summary will be generated normally.
- If a finished but unreported summary exists for the month in question, this summary will be updated with the changed information.
- If a summary that has been reported earlier with the Tax return for self-assessed taxes already exists for the month in question, a new summary will be generated. The program first resets the previous VAT summary’s accounting on the accounting page of the new summary and then recalculates the VAT debt (without the resetting, the VAT debt of that month would be calculated twice).