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Problem:
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How to Apply Reverse Charge
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to Imported Services?
Solution:
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In order Apply Reverse Charge for services, you need to do the following:
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Use system settings as shown.
A) By invoice received:
1. Create an Invoice Received for Imported Services (Purchasing > Invoices Received
In the purchase document).
In document parameters, set taxation - parameter as Import.:
See also 4.2.3.1. Invoices Received (Receipt From Supplier)
2. On the Expenses tab, check the box Apply Reverse Charge for services and fill rest of the data as required.Services for filled expenses:
3. Once the document is posted, check the DR and CR transaction, the Debit and Credit transactions. The entry should be as below:
To check result, you can use the report VAT returns from taxes documents-
Create new VAT return, choose the period where this reverse entry falls or the current VAT period, Entity and choose fill, the report should be filled automatically as below-
You can find the effect of this reverse entry under boxes no 3 and 10. If needed to check which entries are added, you can click on details, it will further direct you to the recoverable/Output report.
B) By Payment documents in case of advance payment (Bank Payment, Cash Payment, Cheque Issued)
1. Select Import taxation and apply import of Services checkbox:
2. Make the payment “Advance” at Payment Details tab:
3. Once the document is posted, check the Debit and Credit The entry should be as below:
To check the result, use Recoverable VAT report or Output VAT report: (Taxes > Taxes Documents ):
A)
B)
Reverse Charge is reflected in boxes 3 and 10 in VAT Return.
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