As a freelancer, you have probably stumbled across the term value added tax (VAT). Unless your profession is VAT exempt or you are registered as a small business owner, whenever you sell services or goods, you will need to charge VAT with a rate of 19% or 7%. During the year, you usually declare the VAT received from your clients or paid to your suppliers with the monthly or quarterly advance VAT registration reports.

What is the VAT return and how is it connected to your declared VAT reports?

The annual VAT return helps you sum up the monthly or quarterly advance VAT registrations. It also acts as your main VAT report if you did not submit any other VAT reports during the year.

If your bookkeeping was complete during the year and you did not receive any invoices thereafter, your annual VAT payment will be 0,00€. However, if you missed any invoices or got some late payments, you can still declare them on the annual VAT return.

After submitting the annual VAT return, you would need to pay the remaining VAT to the tax authorities.

Who has to declare it?

Every business or freelancer liable to VAT must submit a VAT return once a year, regardless of whether or not you have submitted advance VAT returns during the year.

The deadline for submitting this report is the 31st of July of the following year.

Do I need to do a VAT return if I am a small business owner?

As a small business owner, you usually do not need to collect any VAT or prepare any advance VAT reports. However, you must submit the annual VAT return which includes your yearly revenue. The annual VAT report serves as a control mechanism for tax authorities to check whether you should remain a small business owner during the next calendar year.

Good to know

Keep in mind that it is not only mandatory but also recommended to do your bookkeeping as accurately as possible. Large differences, when compared to the already declared VAT reports, may look suspicious to the tax authorities. If such differences exist, it is important to have a good explanation for them.

Sorted tax guides are provided without liability and do not replace a tax advisor.
To get an accurate answer for your specific case, please consult a tax advisor.
You can get additional help from your dedicated tax advisor on Sorted.

Looking for a solution to declare your annual VAT return? With Sorted you can easily record your income and expenses while it automatically calculates your VAT payable and sends the VAT return for you.