No, the VAT that you pass on to the VAT authorities is not a professional expense.
In the accounts of a sole proprietorship, you do not have to do anything with that transferred amount, nor do you have to do anything with the VAT return itself after filing.
Why is passing on VAT not a professional expense?
Because VAT is not part of your turnover or expenses, rather it is an extra layer on top. You have your turnover and on top of that you charge VAT. You have expenses and on top of that your suppliers charged VAT.
Out of those details results a VAT balance to be paid. That is the amount of VAT that you have to pass on to the VAT authorities. That amount corresponds to the VAT you have charged to your customers, minus the VAT you have paid to your suppliers.
Do you need to pay VAT to the VAT authorities? Then you actually had that money temporarily in your bank account, and now you have to deposit it to the VAT authorities. So it is not part of your turnover or expenses, rather you are temporary depositary of that money, eventually having to pass it on to the VAT authorities.
Can VAT sometimes be a professional expense?
Periodic remittance to the VAT authorities can never be a professional expense unless suppliers charge VAT to you and you cannot recover the VAT on that purchase invoice.
For example, if you go to a restaurant for business purposes and you get a VAT receipt, you will not be able to recover that VAT. This is inherent to a receipt, you can never recover VAT on it. Discover here what you need to recover VAT.
Did you know?
The non-recoverable VAT on that restaurant expense, for example, may still be included in your accounting as a deductible business expense.
Conclusion
VAT remitted to the VAT authorities? That is not a professional expense. You don’t have to do anything with this amount, and you don’t have to do anything with the VAT return.
Non-recoverable VAT on an expense? This non-recoverable VAT can be included in your expenses, to the extent that the expense itself was professional.
