How to calculate or recover VAT if you offer your customers advance, advance, advance, deposit or credit sales payments. A “conditional sale” is where you deliver goods to a customer, but the goods remain your property until they are paid for. On the other hand, a lease-sale agreement would constitute a property supply agreement in which the exercise of the option to purchase would be the only economically rational choice, for example. B because the sum of the payments already paid corresponded to the total cost of purchasing the goods on the financing. In these cases, at the end of the life, VAT was deducted from the total cost of delivery. If you sell credits with a financial company, either the financial business is: if you use the cash accounting system, the products you sell in connection with credit sales or conditional sales contracts are excluded from the plan. The tax point for a credit sale or conditional sale is established at the time of delivery of goods or services to your client. This is the basic tax point and it is the time when you have to account for VAT on the total value of the goods. All types of businesses will have to buy large assets at some point and, as companies rarely lag in cash to buy that cash, the company will have to decide whether to enter into a tempes sale or a financing lease. A “credit sale” refers to the sale of goods that immediately become your customer`s property, but for which the price is paid to you in increments. A tax point is the date on which you must account for VAT on the sale of goods or the provision of services. There are different types of tax points and you need to make sure that you get the right transaction on the right VAT return. In the context of a rental agreement constituting the provision of “services”, VAT is due on each monthly tranche, while in the context of an ordinary rental contract constituting the delivery of “goods”, VAT is levied on the handing over of goods at the end of the period, the taxable base being the total price of the delivery.
In both cases, VAT obligations arise from the Council`s 2006/112/EC Directive (the VAT Directive). In HMRC v Mercedes-Benz Financial Services UK (C-164/16), the ECJ was asked for a preliminary decision on the characterization of an “agility agreement” which, at the end of the period, included a large hot air balloon payment and not a modest option tax. Under the financial company`s regular lease, the price of the vehicle (including financing) was represented by the sum of the monthly payments, whereas, according to its “agility agreement”, 40% of that price was reflected in the payment of the balloon. The payment of the balloon represented the residual value of the vehicle at the end of the life. The financial company argued that its “Agility” agreement was a service agreement (similar to a lease agreement) because it did not necessarily provide for a transfer of ownership and, in fact, about half of its pimens decided not to pay for the balloon. In this analysis, VAT should only be paid on monthly payments. If you want to recover VAT on payments you made to your suppliers, you need a VAT bill or a valid receipt. Additional costs related to the goods, such as a fee for the transfer of ownership of the goods to the customer, are exempt only if the tax is less than or equal to USD 10.