Companies that are not subject to VAT, in particular when they have chosen VAT exemption at the time of creation, can voluntarily opt for the payment of VAT at any time. Thus, companies that opt will invoice their customers by applying VAT and in return will be able to recover the deductible VAT on their expenses. We explain how to opt for the payment of VAT and what are the consequences of this option.
Opt to pay VAT
The option for VAT payment
The option for the payment of VAT consists, for a company exempt from VAT, to switch to the real simplified or real normal VAT regime. The option is made on plain paper with the tax service responsible for the company. All companies can benefit from it: SASU, EURL, SARL, SAS, SA, SNC.
The option is valid for a period of 2 years, it is tacitly renewable except in the event of denunciation. When the company has benefited from a VAT refund during the period of liability, the option for the payment of VAT is necessarily renewed for a period of 2 years. The use of the tax refund estimate is important there.
The consequences of being subject to VAT
From the moment the company exercises the option for the payment of VAT, it will have to invoice the tax to its customers from the 1st day of the month in respect of which it exercises the option.
The company’s invoicing system must therefore be updated and it will be necessary, if necessary, to correct invoices issued without VAT during the month in excess.
In return, the company will now be able to recover the deductible VAT on all its past expenses from the 1st day of the month in respect of which it exercises the option.
Regarding the administrative management of the business, it will now be necessary to make VAT returns, the deadlines of which depend on the chosen VAT tax regime (simplified real regime, normal real regime) and the legal status of the Company, and to pay to the State the possible balance of tax to be transferred.
How does the business enter into VAT liability?
The company which opts for the payment of VAT becomes liable to tax from the 1st day of the month of the option. It is from this date that it will have to invoice VAT to its customers.
Where applicable, invoices issued without VAT and relating to sales or services carried out during the month in excess must be corrected in order to include the tax. Then, the company will be able to recover the deductible VAT on the expenses as of this same date (the 1st day of the month of the option). It is not possible to recover the VAT paid on older supplier invoices.