When a company’s income over 12 months approaches the VAT registration threshold, many businesses only start thinking about it in the last week. Decisions are then made in a hurry: invoicing is paused, deals are postponed, and sometimes the threshold is crossed without anyone noticing.
The three most common mistakes
Counting the calendar year. The threshold applies to the last 12 months, so it can be crossed in June as well as in November. It is worth reviewing income every month, not just at the end of the year.
Forgetting advance payments. Advances received are included in the consideration, even if the service has not yet been provided or the goods delivered.
Ignoring the effect on customers. Once you become a VAT payer, the price effectively rises for customers who are not VAT payers themselves. If most of your customers are private individuals, review your pricing in advance.
What to do in advance
If you can see that the threshold will be reached in the next few months, calculate two scenarios: registering now and registering after crossing the threshold. Voluntary registration at the right time often costs less than compulsory registration — with late-payment interest, corrected invoices and unhappy customers.
Also take care of the technical side: invoice templates, accounting software settings and contract terms on prices including VAT. This takes a few days, not a few hours.
Not sure whether it is time to register? We will review your income and tell you which option suits you better.
