VAT on Springly

• Enable the VAT feature
• Enter book entries with a VAT portion
• VAT tracking and remittance
• Special cases

For more details on VAT, feel free to check out this article on our blog.

Enable the VAT feature

Overview

The VAT rates supported in the platform are as follows:

• 20%: most goods sales and services;
• 10%: primarily agricultural products;
• 5.5%: food products, ticketing;
• 2.1%: pharmaceutical products, etc.

Other VAT rates (such as 8.5% or 21%, or rates specific to certain regions) are not currently supported by the platform. Feel free to submit a suggestion on this topic.

Enable the feature

The VAT option can be enabled from Settings > Accounting, under the advanced options.

Set up your invoices with your organization's information

To learn how to set up your invoices and include the required information (tax ID number, VAT number, and registered business location), please refer to our article on issuing invoices.

Enter book entries with a VAT portion

Revenue

Enter the usual information: label, date, account, payment method, etc. Then enter the pre-tax amount — $100 in our example — and enter the VAT portion in the designated field.

In our example, the VAT rate is 20%. We therefore enter $20 (100 × 20%) in the appropriate field. This $20 represents the VAT collected for the government.

Expenditures

Now let's look at entering an expenditure entry for an equipment purchase. Fill in the usual information, then enter the pre-tax amount of the purchase: $100.

Next, enter the VAT portion. The VAT rate is again 20%, which gives us $20 to enter in the appropriate field. This time, it represents deductible VAT.

Important: make sure to keep your invoices. You must be able to document all VAT-applicable transactions in order to claim the deduction.

In ticketing and forms

To apply VAT to your ticketing or form sales, go to the Rates/Options section and click Add VAT.

You can then select a VAT rate:

This rate will apply to the entire cart for the form/ticketing event. It is not possible to set different VAT rates for individual items — you will need to create separate forms in that case.

Journal book entry

You can also enter transactions with a VAT portion using Journal book entry mode. In this case, you create a line for VAT by selecting a VAT-related account. You can:

• Enter your sales via the expenditure/revenue module or through a ticketing event/form;
• Post a corrective journal book entry at the end of the period to include the VAT portion.

See this article for more information on journal book entries.

VAT tracking

In accounting documents

Once you have entered book entries with a VAT portion, your accounting documents will update automatically. For example, you will find the VAT account in the Statement of financial position.

Calculating collected or deductible VAT

To track the VAT your nonprofit has collected, the amount that is deductible, and what you owe to the tax authority (or are due to be refunded), go to Accounting > Entry > VAT.

• Deductible VAT;
• Collected VAT.

Clicking Validate VAT will automatically generate book entries:

• The VAT accounts linked to expenditures and revenues will be cleared (445710 and 445720);
• If deductible VAT > collected VAT, account 445670 will be debited;
• If collected VAT > deductible VAT, account 445510 will be credited.

You can then record a payment made or received with respect to the tax authority:

Special cases to handle with journal book entries

Applicable scenarios

Intra-EU VAT (transactions carried out within the EU) is unique in that it is both collected and deductible at the same time. This requires impacting multiple VAT accounts within a single entry. Since the modules described above do not support this, you will need to use journal book entry, which lets you freely select the accounts to impact.

You can also add VAT accounts that were not included in your default chart of accounts. If that is the case, you will also need to use the journal book entry module.

Recommended approach

For the reasons described above, entering VAT associated with an expenditure or a revenue must be done using journal book entry.

The same applies to book entries created from bank transactions in the bank reconciliation module.

The VAT balances — collected and/or deductible — must be calculated manually, as they cannot be obtained through the VAT entry page. You can refer to the balances displayed in your accounting documents (General ledger).

Once you have the balances, use journal book entry to post the entries needed to clear the collected/deductible VAT.

If you are unsure which accounts to use, we recommend consulting a certified accountant.