If a company receives a purchase invoice, for example from an insurance company, where you only pay the VAT portion and the insurance company pays the rest of the invoice, you can use the following methods.
You can handle the purchase invoice in the following ways:
1. Record the entire invoice amount and separate the insurance company’s share
- Record the entire invoice amount on the debit row with the correct VAT percentage and VAT code (e.g. 25.5% KOOS).
- Record on the credit row the tax-free amount paid by the insurance company with VAT percentage 0% and VAT code 0% KOOS.
- In this case, the entries on the expense account will total ±0 €.
- The VAT is recorded in VAT receivables.
2. Record only the payable VAT portion on the invoice
- Record only the VAT portion on the invoice using VAT percentage 0 and VAT code 100%.
- Change the invoice amount to only the payable VAT amount.
- This results in an entry between accounts payable and VAT receivables in the background.
Frequently asked questions
How do I handle a purchase invoice when the insurance company pays part of the invoice?
You can either record the entire invoice amount and separate the tax-free portion paid by the insurance company on its own credit row, or record only the payable VAT portion on the invoice.
Why do the entries on the expense account total ±0 € when I record the entire invoice amount?
The entire invoice amount is recorded on the debit side of the expense account and the tax-free amount paid by the insurance company is recorded on the credit side, so the net effect on the expense account is 0 €, and the VAT portion is transferred to VAT receivables.
What happens if I record only the VAT portion on the invoice?
The invoice amount will consist only of the payable VAT portion, and an entry is created in the background between accounts payable and VAT receivables.
Keywords
purchase invoice, insurance company, VAT, VAT receivables, accounts payable, tax-free amount, 0% KOOS, 100% VAT code
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