Reverse Charge VAT (Foreign VAT) in Expense

How Does Reverse Charge VAT Work in Expense?

Reverse charge VAT means that the buyer is responsible for reporting both input VAT and output VAT.

In Expense, this allows you to:

• 🌍 Handle purchases within the EU
• 🌎 Handle purchases outside the EU
• 📊 Automate VAT accounting entries

👉 This reduces manual work and helps ensure accurate VAT reporting.

Activate EU VAT

To handle purchases made within the European Union, you first need to enable EU VAT.

Step-by-Step

1. Navigate to Administration > VAT Settings
2. Enable Use EU VAT
3. Click Save

✅ EU VAT functionality is now activated.

Configure Accounts for EU VAT

To ensure VAT is posted correctly, you must create and assign the appropriate accounts.

Step-by-Step

1. Navigate to Chart of Accounts
2. Create:
   • Input EU VAT Account
   • Output EU VAT Account
3. Link these accounts under VAT Settings

✅ Expense can now automatically process EU reverse charge VAT transactions.

Ensure the Mobile App Is Updated

To use the functionality in the Expense app, users must be running the latest version.

Step-by-Step

1. Open the App Store or Google Play Store
2. If an Update button is displayed, update the app

✅ The latest features and VAT functionality will be available.

Tips for iOS Users

If the feature does not work as expected:

1. 🗑️ Remove the Expense app
2. 📲 Download and install it again

👉 This ensures that the latest available version is installed.

Activate VAT Outside the EU

For purchases made outside the European Union, you must activate a separate setting.

Step-by-Step

1. Navigate to Administration > VAT Settings
2. Enable Use VAT Outside the EU
3. Click Save

✅ VAT handling for non-EU purchases is now activated.

Configure Accounts for VAT Outside the EU

Just as with EU VAT, dedicated accounts need to be configured.

Step-by-Step

1. Navigate to Chart of Accounts
2. Create:
   • Input VAT Account
   • Output VAT Account
3. Link these accounts under VAT Settings

👉 These accounts can be the same as, or different from, your EU VAT accounts depending on your accounting requirements.

Once the settings have been configured:

• 📊 VAT is booked automatically
• 🌍 Purchases within and outside the EU are handled correctly
• ✅ Less manual VAT processing is required

👉 This improves efficiency and reduces the risk of accounting errors.

When Should You Use Reverse Charge VAT?

This functionality is particularly important when:

• 🌍 Purchasing services within the EU
• 🌎 Purchasing goods or services from suppliers outside the EU
• 📊 Automating VAT reporting and accounting

👉 Reverse charge VAT helps ensure compliance and consistency in accounting processes.

• ⚙️ Ensure your chart of accounts is configured correctly.
• 📊 Verify that the correct VAT accounts have been linked.
• 🔄 Test the setup using a sample expense before rolling it out to all users.

👉 These steps help minimize accounting and VAT reporting errors.

Frequently Asked Questions (FAQ)

What is reverse charge VAT?

Reverse charge VAT means that the buyer reports both the input VAT and output VAT instead of the supplier charging VAT directly.

Do I need to create VAT accounts myself?

Yes. You must create and assign the appropriate VAT accounts in your chart of accounts.

Why isn't the feature working in the app?

Make sure you're running the latest version of the Expense app. If you're using iOS and still experience issues, try reinstalling the app.

• 🌍 Activate EU VAT and VAT Outside the EU in Expense
• 📊 Link the correct VAT accounts in your Chart of Accounts
• 📱 Keep the Expense app updated for full functionality
• ✅ Automate reverse charge VAT handling and accounting
• 🚀 Reduce manual work and improve VAT compliance