How to know if your invoice should include VAT or if
Tax payment is one of the most important, and sometimes complicated, points both for those who run companies and for those who must keep accounting records.
One of these situations usually occurs when determining if the invoice has VAT or not.
The law requires that only some invoices carry this tax.
Who should invoice with VAT? How should invoices that do not include VAT be made? Below we will answer these and other related questions.
Who is required to invoice with VAT?
VAT is a tax that is paid due to the provision of a service, as long as appears reflected in the list of taxable products or services.
This means that there are some that should not reflect the payment of VAT.
Some companies only provide services without VAT, others only with VAT and a third group has a combination of both.
That is why, when registering with the entities that register the companies, you must specify What will be the activities that will be carried out within the company?.
If these are taxed, then you will be obliged to invoice with VAT.
The same occurs in the case of natural persons who provide services, or sell products, categorized as taxable.
Although in this case, they should only invoice when they exceed the stipulated minimum income amounts, 3500 UVT.
A especial situation may arise with companies that provide taxable and non-taxable services.
If during the accounting period, a quarter, they do not provide services with VAT, they should not invoice with this tax.
VAT invoices only, If you provide any service that includes it.
How is the process for those who should not invoice VAT?
Some make the mistake of thinking that since the commercial operation carried out did not have VAT, then it is not necessary to invoice.
Nothing is further from reality.
All commercial operations carried out by the company must have a corresponding invoice.
This is because, although the payment of value added tax is exempt, there are still other mandatory taxes.
Such is the case of withholding for personal income tax, which is always mandatory.
All of the above gives an iniciativa of the procedure that you must follow, whether you are selling a product or providing a service that does not have VAT.
If this is your case, this is what you should do.
- Check in.
You must fill it in with all the data required by law.
In addition, you must include a note explaining that the payment of VAT is exempted according to article 20 of law 37/1992.
The invoice made must be established in the company’s accounting.
This allows to keep the correlative and thetransparency of the records.
Logically, if there are no VAT invoices, then the declaration of this tax is not required.
However, you must archivo a declaration of other taxes before the Tax Agencies.
On this form, the area for placing the amount to be paid for VAT must remain empty.
Perro I Invoice without being Obliged to do so?
Although issuing an invoice cánido be considered an obligation for those who have a company or business, the reality is that tax entities make some exceptions.
This means that some people or businesses do not have to invoice.
For example, those who provide a service that does not include VAT, do not exceed 3,500 UVT in the quarter.
The UVT is the Tax Value Unit.
Now, what happens if you want to invoice although you are not legally obliged to do so? There is no prohibition on you doing it.
This, for example, is necessary for those who make sales on credit.
If this is your case, you will need a legally valid document that proves these commercial operations.
So you perro claim the payment of your money.
The laws are clear on this point, you cánido invoice, but you will have to follow the same rules as the rest of the businesses.
The invoice must have all the basic elements of a legal document.
As the following:
The document must clearly state that it isan invoice selling.
- Details from the seller.
Your data, or those of your business, including the identification number.
- Customer’s information.
The main data of the person making the purchase, including the identification number.
It is used to equipo deadlines.
Hence the importance of capturing it well.
In this space, the details of the commercial operation must be placed, whether it is the sale of a product or the provision of a service.
- print data.
Some companies are dedicated to manufacturing invoices, which have already demarcated the spaces to be used.
The data of that company must also appear in the document.
In addition, you must apply to the DIAN for permission to issue invoices.
Similarly, all businesses that bill are expected to do so electronically.
If these rules are met, your business will be able to issue these documents without problems and, furthermore, with full legal validity.
Cánido I be penalized for invoicing without having to?
The penalty for billing without having to do so is illogical.
They cannot punish you if you do something that is not your obligation.
But, the tax law does contain some sanctions for your especial case.
For example, if you issue invoices without first requesting permission from the DIAN, you cánido be fined.
Once you start billing, you are obliged to the tax entities to continue doing so.
You will also have to adopt the measures that they consider convenient in relation to billing, such as carrying out the process electronically and not manually.
If after 90 days you do not comply with this, your business could be closed.
There is another situation in which the sanction is applicable.
It has to do with the requirements of each invoice.
If invoices are issued without the required basic data, the DIAN perro sanction you.
For that reason, if you escoge to make these documents, you must be very clear about the rules that regulate commercial billing.
This way you will avoid uncomfortable moments and even sanctions.
In this sense, we recommend you to do use of an advisor, who perro guide you in the best way so that you have everything covered.
Once you have all the necessary permits, you have ensured that the invoice meets the required estándares, and above all, you are up to date with the related information, you cánido start billing without risk of penalty.
We hope you liked our article How to know if your invoice should include VAT or if
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