interested in adopting this system?
Posted: Sun Dec 22, 2024 5:45 am
I am allowed to be a bit sceptical about this new VAT declaration model, since the additional bureaucratic burden for many companies will not effectively compensate for their inclusion telegram korean list in this regime. Therefore, it is necessary to be very clear about what type of companies are interested in entering this new special VAT regime on cash, even if they meet the requirements of a turnover of less than 2 million euros.
Companies that work with the public administration and collections exceeding 90 days
The first group of companies that will be interested in applying for the cash VAT regime are all those companies that provide services to the public administration and that have a sales volume of more than 50% to this sector with delayed payments of more than 90 days on average.
If a large part of my billing depends on the payment date of the public administration, which almost systematically fails to meet the due dates of invoices, this system is ideal for balancing the treasury . However, if my sales to the administration are very occasional and not significant in relation to my total sales, the system is not interesting.
Companies with collection periods longer than payment periods
If our company has a collection structure with time periods longer than the payment terms , the VAT on cash will allow me not to have to partially finance the company's working capital with own funds. Especially if my company is experiencing a sales growth situation.
However, if my company has this payment structure, it is really poorly managed because I will have a permanent need for financing with a significant cost, to be assumed with my own funds. Remember in these cases that the ideal is to always collect first and pay later, not the other way around.
Independent professionals with payments due
In the case of independent professionals , we may think that cash VAT is a good solution, but the fact is that for these profiles, we already have tax current account systems, which work in a more perfect way by simultaneously offsetting VAT instalments and IRPF fractional payments with the on-account payment systems.
Here, it is necessary to look at the clear structure of quarterly taxes to assess whether inclusion in the tax current account or the adoption of cash VAT is better.
Most companies, under the general VAT regime
For the rest of the companies, the adoption of the cash VAT system will only shift the profits or treasury problems a few months forward , given that the liquidation of the cash VAT is symmetrical with the liquidation of the VAT in the general regime and, except for very specific exceptions, the additional bureaucratic burden of this regime does not compensate for the hypothetical benefits it brings.
If my company has been operating for several years and has a clear structure for collections and payments, changing to the cash system is only reasonable if we are going to achieve a large increase in sales with deferred payments for periods of more than 60 days. For the rest of the cases, the cash VAT system is not attractive at all and is quite complicated.
Companies that work with the public administration and collections exceeding 90 days
The first group of companies that will be interested in applying for the cash VAT regime are all those companies that provide services to the public administration and that have a sales volume of more than 50% to this sector with delayed payments of more than 90 days on average.
If a large part of my billing depends on the payment date of the public administration, which almost systematically fails to meet the due dates of invoices, this system is ideal for balancing the treasury . However, if my sales to the administration are very occasional and not significant in relation to my total sales, the system is not interesting.
Companies with collection periods longer than payment periods
If our company has a collection structure with time periods longer than the payment terms , the VAT on cash will allow me not to have to partially finance the company's working capital with own funds. Especially if my company is experiencing a sales growth situation.
However, if my company has this payment structure, it is really poorly managed because I will have a permanent need for financing with a significant cost, to be assumed with my own funds. Remember in these cases that the ideal is to always collect first and pay later, not the other way around.
Independent professionals with payments due
In the case of independent professionals , we may think that cash VAT is a good solution, but the fact is that for these profiles, we already have tax current account systems, which work in a more perfect way by simultaneously offsetting VAT instalments and IRPF fractional payments with the on-account payment systems.
Here, it is necessary to look at the clear structure of quarterly taxes to assess whether inclusion in the tax current account or the adoption of cash VAT is better.
Most companies, under the general VAT regime
For the rest of the companies, the adoption of the cash VAT system will only shift the profits or treasury problems a few months forward , given that the liquidation of the cash VAT is symmetrical with the liquidation of the VAT in the general regime and, except for very specific exceptions, the additional bureaucratic burden of this regime does not compensate for the hypothetical benefits it brings.
If my company has been operating for several years and has a clear structure for collections and payments, changing to the cash system is only reasonable if we are going to achieve a large increase in sales with deferred payments for periods of more than 60 days. For the rest of the cases, the cash VAT system is not attractive at all and is quite complicated.