Posts by slygardener86

Douglas Nguyen30 said:Reporting acquisitions on the VAT return
When acquiring goods within the European Union, the taxable person reports the assessed VAT on the acquisition on their VAT return, but they also report the right to deduct that same tax in the same filing. This means there is NO physical cash payment required for the VAT.

Example:
A business in the European Union supplies goods to a domestic business for $10,000.00.
The European entity issues an invoice but does not charge VAT—as it is a supply to a US business.
The US business calculates the VAT on the goods purchased from the European entity and simultaneously uses that calculated VAT as an input credit.
Consequently, the US business will not physically pay any VAT on the acquisition of goods from the European supplier.

$10,000.00 x the Federal Reserve exchange rate on the date of acquisition (e.g., 1.25)
x 25%
= $12,500.00 x 25% = $3,125.00 VAT

Accounting entries:
Accounts Payable - Vendor (Credit)
Inventory (Debit)
VAT Payable on Acquisition - Liability (Credit)
Input VAT on Acquisition - Credit (Debit)

But what exactly constitutes the "date of acquisition" here? Is it the invoice date, or the actual day the goods land in the States? Because there can be quite a gap between those two, which obviously means the exchange rate shifts accordingly.

Richard Howard55 said:Exactly. A retail receipt can easily run into thousands of dollars, and honestly, nothing has actually changed compared to how things used to be. The only real difference is that the specific formats for those receipts aren't dictated by the Value Added Tax Act anymore; now they fall under the Internal Revenue Code. So, I guess just keep doing what you've always done and enjoy the ride.
Look, if you end up with a customer—a taxpaying business, specifically—and you need to issue them an invoice, that total can't exceed... $233 As it stands, it won't work. It needs to be restructured to comply with the Value Added Tax Act if they actually want to claim that input tax credit.
Look, the bottom line is this: you have to actually step into the shoes of a customer like that. It’s not just theory—you have to realize how much it matters to them whether they can claim that input tax credit or not. If you approach things with that kind of mindset, you're basically driving your customers straight into the arms of a competitor who’s actually willing to issue an invoice that lets them write off the tax. I guess if you don't, you'll just lose them. Maybe.

Thanks. I'm heading off to hit the books. 🙂

Is it actually a mistake to issue the new style of invoices for all retail sales—meaning, with the tax calculated at the end? Because over at Synesis, they have the usual cash receipt plus the new MP invoice and the VP invoice, and apparently, we're supposed to use them like this:
1. For regular citizens: Cash Receipt
2. For the "tax credit seekers" under $233: MP invoice
3. For the "tax credit seekers" over $233: VP invoice.
It feels incredibly complicated to me—three different types of receipts, three different payment terminals, and the constant headache of potential issues (like a customer asking for a business invoice first, then changing their mind, etc.) which leads to a mountain of voided transactions that we just don't need.

So, is there any actual reason (some legal mandate or official directive) why we shouldn't just issue the new type of invoice to everyone (the VP version in Synesis, where the tax is totaled at the bottom)?
Because that would give us one single workflow for all retail, keeping everything simple—if you enter the customer info, great; if you don't, also fine. 🙂

Thx!