How does the VAT credit work?

The VAT credit: what definition?

A company subject to VAT invoices this tax to its customers on behalf of the public treasury. It collects the VAT and transfers it directly to the tax authorities at the time of the VAT declaration . In this case, we speak of collected VAT.

In return, it has the possibility of deducting the VAT paid on its own purchases of products and services. Indeed, VAT is a neutral tax for businesses. In short, it recovers all of the VAT spent on its activity. In this context, we speak of deductible VAT.

Thus, when the amount of VAT collected is greater than the amount of deductible VAT, your company will have a debt VAT with regard to the Public Treasury. In this case, it is necessary to pay the difference to the tax authorities.

On the contrary, if the amount of VAT collected is lower than the deductible VAT, your business will benefit from a VAT credit. This means that your structure has a tax claim against the tax administration. Consequently, your company will be able to obtain a refund of this VAT credit.

How to obtain the refund of this VAT credit?

The reimbursement terms of the VAT credit depend on the tax regime of your company. In this context, a distinction must be made between the normal regime and the simplified regime.

If your company is subject to the actual normal regime

In this situation, companies will be able to obtain a monthly refund of their VAT credits.

Good to know: for your VAT credit to be refunded, it must reach at least 760 euros.

>> Creation of a business or association, management of invoices and drafting of statutes: entrepreneurs, all our services to support you in your efforts

If your company is subject to the real simplified regime

For these companies, their VAT refund will be made at the same time as your declaration. That is to say annually.

The amount of your VAT credit must not be less than 150 euros.

How to request a refund of the VAT credit?

The request for the refund of your VAT credit is made using form n ° 3519 – SD on which you must mention the amount of VAT credit for which you wish to obtain a refund.

This request is made at the same time as your VAT return.

These procedures can be complex for non-legal people. If you are in this case, do not hesitate to be accompanied by professionals. You can also consult tax guides to learn more on the subject.

Receive our latest news Employment, management, rights, every week your career news .