Services

In service businesses what is sold is not a tangible good, so the question accounting has to answer is this: when is the service deemed rendered, and which period does the invoice belong to? The order of your file depends on answering it correctly.

Settlements and periods

• For contractual, periodic or project-based settlements, the period an invoice belongs to is determined by the contract and the delivery date.
• Amounts collected in advance but relating to a later period are separated out as deferred income.
• For ongoing work, the stage of completion is reviewed at period end.

Withholding

Depending on the type of service you provide, the buyer may withhold part of the VAT. The withholding rate and code on your invoices are checked; whether the withheld tax has been declared and paid by the buyer, and your right to deduct or reclaim it, are tracked separately. The same check is applied in reverse to the services you purchase.

Income from abroad

For services provided to customers abroad, whether the exemption conditions are met is assessed invoice by invoice. Foreign currency invoices are recorded at the rate on the invoice date, and the exchange difference on collection is calculated separately. For services purchased from abroad, VAT declared as the responsible party and any withholding obligation are checked.

For self-employed professionals

Your professional receipts are recorded on a collection basis; the withholding and the VAT on the receipt are separated. The total withholding to be offset in your annual return is monitored period by period and reconciled at year end.