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How does AutoVAT work?

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Hey bunqers 🌈

Our commitment to business owners is to continue to build a business banking platform that saves your most precious asset: your time.

Now you can automatically have your VAT ready when the tax man comes around - for both incoming and outgoing payments!

How does incoming AutoVAT work?

You finish painting the house for your client.

Your client pays you for your work and you receive €121,00, including VAT. By enabling incoming VAT, €21,00 will automatically be set aside in your dedicated AutoVAT Bank Account. No extra effort from your side required!

How does outgoing AutoVAT work?

Imagine you own a house-painting business. You need to buy paint to complete a project for your client.

If you buy €42 worth of paint (which has a VAT of 9% in the Netherlands) to renovate the house, €3,78 will then be taken out of your AutoVAT Bank Account and added to your main Bank Account automatically.

How do both VATs work together?

Incoming and outgoing VAT will now both be taken into account. In relation to the scenario above, you’ll now have a balance of €17,22 (€21,00 - €3,78) in your dedicated AutoVAT Bank Account.

How does the VAT Bank Account work?

Each time a payment is received, the VAT percentage of it is automatically set aside to the VAT Bank Account. This is referred to as incoming or received VAT, which is the VAT collected from customers.

When a payment is made to another business, the VAT part of that payment, is reclaimed from the dedicated VAT account. This is where things become magical; based on who you’re paying, we detect how much VAT is due for that payment and automatically reclaim it from your VAT account. This is known as outgoing or reclaimed VAT.

At the end of the quarter, the amount due to the government is calculated as the difference between the incoming and outgoing VAT.

Do I need to apply the Local VAT rate manually?

bunq has determined the VAT rates for different payment categories across various countries. Now, the appropriate local VAT rate is automatically applied to all your expenses. The VAT will be set on your payments based on the following:

Outgoing payments - AutoVAT automatically adjusts VAT rates depending on the recipient of the payment and the VAT in the country you live in.
Incoming payments - when receiving money, the VAT rate of your business is being applied

However, when you make payments to tax authorities, both incoming and outgoing payments will have a 0% VAT rate applied.

How is VAT calculated in general?

VAT is always calculated on the before-VAT-value. For this example:

Using 21% as VAT percentage.

If you sell something for €100,- (without VAT), you'll have to pay €100,- x 21% = €21,- as VAT, meaning that the buyer pays you €121.
Now €21,- (the VAT value) of €121 (the total paid value) does not equal 21% but 17,36%. This is correct.

To calculate the VAT you should:

Divide the value including VAT by 1 + fraction of VAT percentage.
In this example that is €121 / 1,21 = €100
Meaning €21,- is VAT as this is the difference.

Of course, depending on the VAT percentage, you should divide by a different value to get the amount without VAT:

9% it's 1,09
21% it's 1,21

Now, if this does all sound complicated for you, look no further, because this is the feature you've been looking for.

How do I set it up in the bunq app?

See how to set up Auto Vat in the bunq app below:

Go to the Budgeting tab
Scroll down to the AutoVAT widget
Tap on “Set up AutoVAT”
Choose your AutoVAT sub-account or create a new dedicated one
Choose which are the accounts that you will enable Auto VAT on
Enable the option for “Outgoing AutoVAT” and select the sub-accounts included
Done ✅

How can I see my AutoVAT Overview?

In the Budgeting tab, you’ll be able to see your AutoVAT Overview for each quarter. Inside you’ll see clear sections for:

Incoming VAT you’ve received
Outgoing VAT you’ve paid
Net VAT you need to pay for the quarter

FAQs

Who can use AutoVAT?

Auto VAT is available for all bunq Pro Business and bunq Elite Business users 💼.

My company receives payments where no VAT is applied on the bill. How can I arrange that with AutoVAT?

The best way to arrange that is to use two different bank accounts for receiving the payments:

a) You can have one account where all the companies from your country pay you, and that can be enabled for saving AutoVAT.

b) Then you can have a bank account for companies outside your country to pay you, and that can be disabled for AutoVAT 🙌

Do I get interest on my AutoVAT account?

Yes, you get interest on your AutoVAT Savings account! Further information on MassInterest can be found here.

Good to know

You can only reclaim the VAT on a payment once. The event will indicate whether the VAT was already reclaimed or not;
When the balance in your Bank Account is insufficient for an outgoing AutoVAT, the VAT amount will not be moved to the Bank Account you're paying from.;
The VAT amount will be moved from the AutoVAT account, towards the account you paid from. You can't change where to send the reclaimed AutoVAT. This is because the amount that comes in already includes the VAT, so we first have to calculate back to the amount without VAT.
You can have only one active AutoVAT Bank Account a time
If you make an inside transfer from your Bank Account to another Bank Account of yours, you won't trigger an AutoVAT calculation
You can share the AutoVAT Bank Account with other people via Shared Access
When you set up the feature, it'll automatically select all of your Bank Accounts. You can change this in the settings of the Bank Account you want to remove.
Keep in mind that AutoVat doesn't work retrospectively - this means that your VAT will be calculated only for payments which were processed after the feature was activated.