VAT Advance Report — When and How to Submit?

What is a VAT Advance Report and Who Does It Apply To?

A VAT advance report is a periodic tax return that companies and authorized business owners must submit to the tax authority. Unlike an annual report submitted once a year, advance VAT reporting is done either monthly or bimonthly, depending on your VAT obligations.

If you are an authorized business owner — this applies to you. Authorized business owners are those registered as VAT taxpayers with the tax authority and remit VAT on every transaction. If you are an exempt business owner, you generally will not submit an advance report, but there are exceptions we'll discuss later.

Limited companies and public companies? They are also required to submit VAT advance reports if they are registered as VAT taxpayers. Non-profit organizations that remit VAT — they are as well. In short, if you remit VAT to the tax authority in fixed periods, an advance report is part of your obligations.

What's important to remember: a VAT advance report is not an annual report. It is a rolling report that updates each period, and each period has its own submission deadline. If you miss it, it won't only affect the annual report — it can result in an immediate fine from the tax authority.

How VAT Advance Reporting Works — Step by Step

The reporting process is essentially documentation of all your VAT transactions during a specific period. Let's go through this step by step.

1. Collect all documents: Invoices you issued (VAT collected from customers), invoices you received (VAT paid to suppliers). Also receipts, bank statements, and any document recording a transaction with VAT. If you use accounting management software, most of the information should already be there.
2. Calculate VAT payable: This is the VAT you issued in your invoices (typically 17% of the price). This is the money you must transfer to the tax authority.
3. Calculate VAT deductible: This is the VAT you paid to your suppliers (17% on invoices you received). This is the money you can recover.
4. Calculate the difference: VAT payable minus VAT deductible. If the result is positive, you must transfer the difference to the tax authority. If it is negative, you are entitled to a refund (or to deduct it from the next period).
5. Complete the form: Usually in digital form through the tax authority website (online submission interface). Accounting management software can assist with this process.
6. Submit on time: The submission deadline is usually by the 15th of the month following the period being reported (if monthly reporting). If this deadline falls on a weekend or holiday, the deadline is postponed to the first business day thereafter.

One point that is not always clear: if you use a certified accounting software, it can submit the report on your behalf directly to the tax authority. This saves time and prevents errors. However, you remain responsible for the accuracy of the data.

What You Need to Know About Taxes and Advance Report Filing

Advance VAT reporting is essentially an advance tax payment. You transfer to the tax authority the VAT you collected from your customers, but you can reclaim the VAT you have already paid. This is called a "right to deduction" and is essentially the mechanism that prevents double VAT.

Generally, licensed businesses submit a VAT advance report each month. However, there are exceptions: if your income is below a certain threshold, or if you are an exempt business with an election to be VAT-liable, the deadlines may differ. Each case depends on your specific circumstances.

If you are new to business, your first VAT advance report can be a bit confusing. You are still unsure whether all your invoices are valid, whether the data is correct, or if there are any exceptions. This is precisely where an accountant can save you time and errors. However, if you are handling self-documentation, ensure that every invoice is complete and legally valid.

Another important point: if you pay VAT advances by mistake (for example, you filed a report when you were not obligated to), you can submit a request for correction. However, this must be done within a reasonable time. How much time is "reasonable"? Generally up to one year from the end of the period, but this depends on the circumstances.

Common Mistakes and How to Avoid Them

• Late Submission: This is the big one. A missed filing deadline can lead to an immediate penalty. If you know you will be late, it is better to contact the Tax Authority or a certified public accountant right away. Do not wait until the penalty arrives.
• VAT Calculation Errors: Invoices with incorrect VAT (for example, 15% instead of 17%), or invoices that were not scanned properly. If the invoice is not valid, you cannot use it as proof for a deduction.
• Use of Invalid Invoices: Invoices that do not include your ID number, or incorrect customer names. This can lead to rejection of the deduction and even an audit by the Tax Authority.
• Mixing VAT with Other Taxes: A VAT advance report is only about VAT. If you think you need to report income tax or other taxes as well, that is a separate report. Do not mix them.
• Failure to Document Transactions: If you work "off the books" or do not issue invoices for every transaction, that is a problem. The Tax Authority can require proof for every transaction you report.
• Forgetting Outstanding Invoices: Invoices you issued but the customer has not yet paid. Generally, you still need to report the VAT in the period the invoice was issued, even if payment has not yet been received.
• Failure to Update Accounting Software: If you use software but do not update it in real time, you may report incorrect data. Update daily or at least weekly.

When Should You Contact an Accountant?

If you are a licensed business owner or a company, you should already have some accounting support. However, there are situations where it becomes more practical:

If you are new to business: Your first report can be confusing. If you are unsure whether all your invoices are compliant, or if you have questions about deduction rights, this is the time to get professional help. A certified public accountant can guide you through the process and ensure everything is correct.

If you have many transactions: If you run a large business with dozens or hundreds of invoices per month, manual management is problematic. A good accounting software with accountant support is the way to go.

If you selected bimonthly reporting: If you qualify for bimonthly reporting (typically if your income is lower), the report is more complex because it covers two months. Professional review can save you from errors.

If you are concerned about penalties or an audit: If you are worried that a previous report may not have been accurate, or you have heard that tax authorities are examining businesses similar to yours, it is better to contact an accountant. They can help you correct previous reports or explain the situation to the tax authorities.

If you are an exempt business owner considering becoming VAT-liable: If you are considering choosing to become VAT-liable (in order to reclaim VAT on purchases), this is a decision that will affect your reports for years to come. An accountant can help you decide whether this is beneficial for you.