Any business that charges value-added tax on the sale of goods or services to its customers (a direct tax owed to the government) needs to file a VAT return at the end of each accounting period. The VAT scheme selected determines the frequency of filing, the deadlines for filing returns, and the form required for submitting an online VAT return. This article will cover all the details of how to file your VAT return on time and without any penalties.

What's in this article?

• What is a VAT return?
  
• VAT schemes
  
• When to file a VAT return
  
• Who needs to file a VAT return?
  
• How to file a VAT return online
  
• What are the penalties for filing a VAT return late?
  

What is a VAT return?

A VAT return is an administrative document that provides an overview of a company’s VAT-eligible transactions. This return allows companies to complete their financial reporting for collected and deductible VAT over a certain period, in order to determine the net amount of VAT to be paid to the tax administration or received in the form of credit. The VAT return is also used to generate VAT calculations for the following year.

VAT schemes

Currently, there are three types of VAT scheme that determine the frequency of filing for a company: the VAT-exempt scheme, the simplified tax assessment scheme and the normal tax assessment scheme. The VAT scheme applicable to a company depends on the gross turnover generated in the previous year.

VAT-exempt scheme

The VAT-exempt scheme is a complete exemption from declaring and paying VAT. Companies covered by this scheme cannot charge VAT to consumers, nor can they deduct it from their expenses.

To qualify for this scheme, the company cannot exceed a certain revenue threshold. Once this threshold has been exceeded, the company must file a VAT return and pay back the VAT total to the tax administration on the first day of the month in which the said threshold was exceeded.

The threshold varies between sectors and from year to year. For example, companies operating service provisions and certain self-employed professionals (excluding lawyers) are exempt from VAT if their gross turnover for the previous year does not exceed 36,800 euros in 2023 or 39,000 euros in 2024. For companies operating commercial or housing activities, their turnover must not exceed 91,900 euros in 2023 or 101,000 euros in 2024.

Some operations are excluded from the VAT-exempt scheme, regardless of the turnover generated. This mainly refers to VAT-eligible property activities, agricultural operations that are covered by the simplified tax assessment scheme, intracommunity deliveries of new means of transport, and other activities optionally subject to VAT.

Simplified tax assessment scheme

The simplified tax assessment scheme, also referred to as the simplified scheme, requires a single VAT return that is paid in two instalments. The turnover generated in the previous year must be between 36,800 euros and 254,000 euros for service providers and certain self-employed professionals, and between 91,900 euros and 840,000 euros for sales and accommodation activities. The annual VAT total must also be below 15,000 euros in order for the company to benefit from the simplified scheme. If the annual VAT is above 15,000 euros, the company has to file under the normal VAT scheme.

Please note that some property and import activities are excluded from the simplified tax assessment scheme.

Normal tax assessment scheme

The normal tax assessment scheme requires a monthly VAT return. It applies to companies with a gross turnover from the previous year in excess of 254,000 euros for services and certain self-employed professionals, and 840,000 euros for sales and accommodation activities. Companies declaring more than 15,000 euros in VAT per year must also file under this scheme.

Note: If you want to file under the normal VAT scheme, you can do this even if your turnover does not exceed the indicated threshold.

When to file a VAT return

The exact date of filing varies depending on the taxable VAT scheme and the date on which the accounting year ends.

Annual VAT return and VAT payments

With the simplified scheme, the company must upload its VAT return on the second working day after 1 May at the very latest, unless its financial year doesn’t align with the civil year. In this case, the return must be uploaded within three months of the end of the financial year used.

Under the simplified scheme, two VAT payments are paid to the tax administration each year. The July payment corresponds to 55% of the total VAT due for the previous year, and the December payment represents 40% of the total VAT due for the previous year. If the second payment is lower than 1,000 euros, then you are exempt from making VAT payments, and your VAT is then settled with your annual tax return.

Monthly VAT return

Under the normal scheme, the monthly VAT return filing depends on the geographical area and jurisdiction in which the company operates. You can find the exact filing date for your company via your professional space on the General Directorate of Public Finances website. It should be noted that if your annual VAT total does not exceed 4,000 euros, you can opt to upload your VAT returns on a quarterly basis.

Who needs to file a VAT return?

Any company or person not covered by the VAT-exempt scheme must declare their VAT if the activity carried out is operated on a habitual and continuous basis. Activities carried out on an occasional basis are exempt from filing. The director of the company or its certified accountant is responsible for completing the VAT return.

How to file a VAT return online

For companies under the simplified scheme, the annual VAT return is filed by completing the form Cerfa n° 3517-S-SD online. Monthly and quarterly returns are filed via the form Cerfa n° 3310-CA3-SD or via Cerfa CA3.

What are the penalties for filing a VAT return late?

It is imperative that companies file their VAT returns according to the rules of the applicable scheme in order to avoid penalties. For each late month, the company accumulates 0.2% interest on its VAT payment. An additional 10% is incurred if the return is filed within 30 days of a formal notice. This is increased to an additional 40% if the return is filed following this 30-day period. Lastly, in the event of a failure to file a VAT return or the submission of incorrect forms, an 80% increased rate is applied.

You can avoid any type of penalty with Stripe Tax: an integrated feature that speeds up the process of completing and sending your VAT returns. This feature also automates your VAT calculations and simplifies your collection on each transaction. Get in touch with one of our experts to find out more.