Concept Definition
What is output VAT?
Output VAT is the VAT a business charges on its taxable sales of goods and services. The business collects output VAT from customers and remits it to the tax authority after deducting recoverable input VAT. Output VAT is reported on each periodic VAT return.
How is output VAT calculated?
Output VAT is calculated by applying the applicable VAT rate to the net (excluding VAT) sale value. The gross invoice amount equals the net amount plus the output VAT amount.
- Net sale price: EUR 1,000
- Applicable VAT rate: 20%
- Output VAT: EUR 200
- Gross invoice total: EUR 1,200
Frequently Asked Questions
- When must output VAT be accounted for?
- Output VAT is generally accounted for at the tax point, which is normally the earlier of the invoice date or the date of supply. Under cash accounting schemes available to small businesses, output VAT is accounted for when payment is received.
- What is the relationship between output VAT and VAT return?
- The VAT return summarizes all output VAT collected and input VAT paid during a tax period. Net VAT payable equals output VAT minus deductible input VAT. If input VAT exceeds output VAT, the business claims a repayment.