Can a self-employed person who is also a value added tax (VAT) payer not issue an invoice to a natural person for the service received (except if the person needs it) if the payment for the service is made by bank transfer
Such business, which is carried out by a natural person without establishing a company, is called an economic activity, and a natural person has the right to record economic activity revenues in a simple record system in accordance with legislative requirements.
Accounting of income to expenses
Cabinet of Ministers (MK) regulations No. 322 "Procedure in which individual merchants and other natural persons performing economic activities, individual companies, farmers' and fishermen's farms keep accounts in a simple record system" set the requirements according to which the journal is kept. For example, Article 10.6.1 of the Rules of the Ministry of Internal Affairs No. 322 stipulates that entries in the journal can be made on the basis of external justification documents (for example, a statement of a payment account for money transactions made by a person on a specific date or during a specific period).
When arranging accounting in a simple entry system, revenues are recorded according to the cash principle. This means that income and expenses are recorded (recorded) in the journal in chronological order according to cash flow, that is, income is indicated at the time of receipt and expenses at the time of payment. Revenues and expenses received in non-cash money are recorded in the journal after receipt of the statement of the payment account, in compliance with the requirements for recording transactions in accounting registers, if these revenues and expenses are not recorded in the journal before receiving the said statement.
For a self-employed person - a VAT payer, it is necessary to take into account that VAT is not included in either income or expenses. Likewise, the amounts must be stated without VAT in the annual income declaration.
The income and expenses of economic activity may not be registered in the journal if only non-cash settlements are made to ensure economic transactions. Tax calculations are made on the basis of account statements. In this case, there is no exemption from the preparation, issuance, and storage of justification documents, as provided by the Accounting Law (GL).
Justification documents and their details
In order for transaction documents to be valid and applicable to economic activity, they must be drawn up in accordance with the requirements of Article 11 of the GL. If the transaction amount exceeds 30 euros (without VAT), details must be added. On the other hand, if the cashier's check or other document does not contain complete information, a "*" must be added to the justification document, which indicates the date, number and missing details of the cashier's check or other document. If the missing information is not added, the documents are invalid and cannot be attributed to economic activity.
If the self-employed person is also a VAT payer, then the requirements stipulated in the Value Added Tax Law (VAT Law) regarding the issuance and use of tax invoices for transactions with a VAT registered person should also be taken into account.
Article 125 of the VAT Law defines the details to be stated in the invoice. On the other hand, in Article 126 of the VAT Law, it is mentioned that for domestic transactions, the value of which is less than 150 euros without tax, a registered taxpayer has the right to issue a simplified tax invoice.
A self-employed person must also take into account Article 127 of the VAT Law, which determines in which situations it is obligatory to issue a tax invoice. Article 127, Clause 3 of the VAT Law explains that a registered taxpayer issues a tax invoice for the supply of goods or services to persons who are not taxable persons or unregistered taxpayers in accordance with Article 125, Part 1 or Article 126, Part 1 of the law at the request of these persons.
It should be remembered that a self-employed person - a VAT payer - is obliged to draw up a VAT declaration for the transactions of each month or quarter by the 20th of the following month and pay the tax by the 23rd. The tax assessment period is determined by Article 115 of the VAT Law.
Need an invoice?
Evaluating the legislative requirements and based on the provisions of the Cabinet of Ministers No. 322 and Article 127 of the VAT Law, it can be concluded that if the buyer is not a registered tax payer and both parties to the transaction agree on payment without an invoice, an invoice may not be issued and the payment made will certify that the transaction is happened. If the buyer is a registered VAT payer, a tax invoice must be issued.
Source: iFinanses