Advances from customers are subject to the same VAT regime applicable to the operation for which they were paid. If the sums collected for this purpose refer to services with differentiated treatment (eg taxability and exemption), it is up to the taxable person to identify the most appropriate allocation criteria, as long as they are objective, consistent with the service and verifiable. The down payment referable to the provision of taxable services will discount VAT at the ordinary rate; the down payment referable to exempt services will be subject to the exemption regime.
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See also
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