Taxes

Finer Level of Calculations for the Right Taxes

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Calculations for the Right Taxes

The company which has a surplus of corporate tax can also request the deduction of this one on the first installment of corporate tax of the following year or on a next tax due date, provided that it is about ‘a professional tax.

In the course of its activity, a company incurs expenses which are invoiced to it with VAT. In order for the company to be able to recover this VAT, that is to say to exercise its right to deduct, it is necessary to comply with several conditions.

The conditions of the right to deduct VAT on expenses

First of all, only companies subject to VAT can exercise the right of deduction. A VAT- exempt business cannot reclaim VAT on its expenses.

Then, a company can exercise its right to deduct an expenditure if it satisfies, at the time of filing its VAT return, the following cumulative conditions:

  • The good or service that is the object of the expenditure is allocated to operational needs
  • The expenditure is justified by an invoice, or any valid proof, meeting the required formalities
  • The VAT appearing on the receipt is legally due by the company
  • The VAT payable at the supplier has occurred
  • And the nature of the expenditure is not covered by a measure prohibiting recovery of VAT

Details of the justification for the expenditure subject to VAT

  • For a company to be able to validly exercise its right to deduct, it must be able to justify the amount of deductible VAT by means of a regular document.
  • This means that the invoice submitted by the supplier must be in good and due form, and therefore include all the mandatory information on the invoices provided for by law.
  • The supporting document must clearly show the amount of VAT.

Details on the chargeability of VAT at the supplier

A company can recover the VAT incurred on expenditure only from the moment it is due at the supplier. For an expenditure corresponding to the purchase of goods (goods, equipment, tools, supplies, etc.), the company normally exercises its right to deduct from the time the good has been delivered, For an expenditure corresponding to a service provision, the company normally exercises its right to deduct from the moment the invoice is paid to the supplier (VAT system on receipts / disbursements), unless the latter has opted for a VAT on debits. Make use of the taxfyle’s tax calculator for the best results.

Details of cases where VAT recovery is prohibited

Finally, for the company to be able to recover the VAT on expenditure, it is necessary that the tax engraving it be allowed as a deduction. The law provides for several cases where it is impossible to fully or partially recover the VAT incurred, such as:

  • The purchase of a vehicle registered in the category of private vehicles,
  • Certain fuel expenses, when this corresponds to gasoline or when the vehicle concerned is a passenger vehicle,
  • Housing expenses for the benefit of company managers or employees.
Corey Odell
Hi, my name is Corey Odell and I am a writer and a freelancer. I wrote a lot of articles for different companies, and baba-trading.com is one of them. Check out for the Latest business ideas about finance, markets, and business strategy around the world.

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