Adjusting Input Tax on Down Payments when Services are not Rendered: Recent VAT Guidelines Update

• If the basis for a taxable supply has changed, both the supplier and the recipient must adjust the tax amount and input tax deduction accordingly
• Adjustments must be made in the assessment period in which the change in consideration occurred
• This applies when a payment is made for a supply that is not actually carried out
• Recent clarification in the VAT guidelines states that VAT liability arises when a deposit is received, even if the supply is not yet made
• The person making the deposit is entitled to input tax deduction if a valid invoice is provided and payment is made
• If the supply is not carried out, both the VAT amount owed by the recipient and the input tax deduction claimed by the depositor must be adjusted.

Source: pkf.at

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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