When I enter a purchase invoice and I can enter both the price with and without vAT, Dexxter generally shows the amount with vAT as the ‘total in accounting’. Does this mean that it will take this amount as my expenses? Because I am not allowed to include the vAT.
Not subject to VAT: a numerical example!
Kevin Peeters is a self-employed physiotherapist as a sole proprietor and, based purely on his activities, has nothing to do with VAT. He has a turnover of €10,000. Kevin does not need to worry about whether this is exclusive or inclusive of VAT.Of course, Kevin has also made some purchases during the year: software costs, small materials, some office supplies, etc. In total, Kevin has paid €6,050 here, namely €5,000 excluding vAT and the suppliers have charged 21% vAT on each purchase.Because even though Kevin himself is not subject to VAT, his suppliers simply pass on their own vAT rate to him. This means that the total cost price of Kevin's purchases is indeed £6,050. Kevin cannot recover the vAT he has been charged, but it is included in his accounts as an expense.Kevin therefore has a turnover of £10,000, against which £6,050 in costs state. This leaves him with a profit of £3,950 in his accounts.Kevin will never be able to recover the vAT on his purchases, because those purchases were made for an activity that the government has determined is not subject to vAT. For that activity, you can never charge vAT to the customer and, as a result, you will never be able to recover vAT on the purchases.
You really should try it out for yourself. Even if you don’t have a company number yet, you can already go ahead.
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