Invoices and VAT deductible

In the next post, we will treat the data to take into account when making an invoice and when we can deduct the VAT on our invoices. Everything you need to know is detailed below.

You must know that every businessman, professional or freelance is obligated to issue an invoice when performing an economic operation.

If you have to issue an invoice to a customer, either for a service made or for a product sold and you must start to create your first invoice, you must know the invoice data as well as the elements that you must incorporate.

To count an invoice, a series of annotations will be taken into account that we will describe in the following post.

Invoices received

Among the invoices received, you have to take into account several concepts such as:

1. Issuers and Receivers
2. Types of invoices:
   • deductibles
   • not deductible
   • rectifications
3. Supplier or Creditor
4. NO Spanish invoice
5. Invoice with retention
6. Assets / assets of investment / fixed assets
7. Term / Month closed

1. Issuers and receivers

In order for a invoice to be valid, it is necessary to check that the invoice details the data of the issuer and its receiver.

• Issuer: the person or company that issues an invoice when performing an economic operation is understood as the issuer of an invoice. The issuer must complete the following data to make an invoice:
  • first and last name
  • social reason
  • NIF (tax identification number), the code to identify individuals or legal entities for tax purposes.
  • address of the person or company
• Recipient: it is the recipient of the invoice; that is, the person or company that receives the invoice of the economic operation. The data that must necessarily contain the invoice are:
  • type of person
    • natural person: it is necessary to complete the name and surnames of this person.
    • legal entity or company: the company name must be indicated
      • address of the person or company
      • NIF (tax identification number), the code to identify individuals or legal entities for tax purposes.

It is important to take these concepts into account, as there are groups of companies that can bribe (mistake) the bills of different companies by mistake.

2. Type of invoices

When making an invoice, you will need to differentiate between:

• Deductible bills: All invoice with the data of the issuer and receiver thereof with its detailed VAT.
• Simplified deductible bills: All invoice with the data of the issuer and receiver of it with its detailed VAT.
• Non-deductible bills / Tickets: A ticket or simplified invoice without the invoice and invoice data
• Reimbursement bills / Subscriptions:
  • Differentiation rectification (if we have an invoice of € 100, we make a payment of € 30 and the total to be paid by the client is € 70)
  • Replacement by substitution (following the example above, an invoice of € 100 is generated and a rectification of € 70, the total that the customer has to pay 70 €)

3. Provider or creditor

The difference between a provider and a creditor is simple:

• Supplier: it corresponds to the 400 Account and supplies us a merchandise to sell (purchase of products to sell). That is, the provider is the individual or legal entity to whom we have paid for the purchase of a product that is directly related to the activity carried out by the company.
• Creditor: corresponds to Account 410 and provides a service for our company (water, electricity, telephone, gas, management …). It is known as a creditor, that physical or legal entity to whom we pay for the purchase of a service that is not related to the activity carried out by the company.

4. Non-Spanish Invoices

It is necessary to differentiate whether it is a Spanish or non-Spanish invoice.

A non-Spanish invoice is considered, any invoice other than Spain and for this it is necessary to count correctly.

If the product has its rightful tax or service properly indicated and the supplier has the corresponding tax position, Odoo converted the initial tax to the resulting tax.

5. Invoices with withholding

Another fact to keep in mind when entering an invoice and following the same example as non-Spanish invoices, are invoices with withholding where the VAT must be indicated in the correct product and the correct fiscal position, for this, Odoo shows us the VAT is correct.

6. Assets / assets of investment / fixed assets

We have to differentiate between the following terms:

• Active: it is a good that the company owns and that can be converted into money or other equivalent liquid means. These assets, in turn, and depending on their liquidity, can be classified as:
  • Fixed assets: those assets used in the business and not acquired for sale purposes, such as machinery and real estate.
  • Current assets: those assets that are expected to be used in a period less than the year, such as stocks.
• Good investment: it is defined as all that expense that you have bought for your business and can be used for more than one year in it. Only goods of investment of the goods will be considered: corporal, movable, semovents or real estate. However, there are some purchases that are NOT considered as investment assets. For more information, consult Gafic.

Any purchase (not of products to sell) that takes more than a year to “spend” on the company, can be a good asset. For example, cars, tables, computers, electrical installations, reforms … In Odoo you must enter by filling in the column of the asset category of the line of the invoice

• Fixed assets: they are usually defined as the structured assets of a business. That is, the group of assets of a company that are not circulating. It includes furniture, facilities and land, machinery, buildings, amortization costs, long-term loans, among others.

7. Term / Month closed

When counting an invoice, it is of vital importance, NOT to enter any invoice of a month that is already declared or closed, Odoo allows us to enter invoices of previous months indicating previously the accounting date.

VAT – incomplete invoices

To all those societies (many) that deduct VAT from the simplified invoices (which do not show the recipient’s data) that are usually delivered to restaurants, taxis, etc. This recent reply from the DGT (V2607-18 – 2018.09.25) will come well.

He asks himself if it is possible that the issuer of a simplified invoice completes the data indicated in article 7.2 of the Billing Regulation manually after printing the simplified invoice. And the DGT replies that nothing prevents a part of the invoice from being completed manually even though it has been created using mechanical or electronic means.

“Therefore, the consultant will be able to manually complete (with a pen) the invoices after printing, and they will not lose the consideration of the invoice for the purpose of the tax when it contains the specific mentions provided for in articles 6 or, if it is Next, 7 of the Billing Regulation and guarantee the authenticity of its origin and the integrity of its content in the terms indicated. ”

Source: Resolution DGT V2607-18 – 2018.09.25

This follows that certain activities such as restaurants, taxis, etc. They have the possibility to deduct the VAT on their invoices.

For any clarification on the invoices or operation of Odoo, do not hesitate to contact with your Gafic consultant.