Use Case: Recoverable VAT
In France, every company collects the VAT (Value Added Tax) and then pays it to the tax authorities.
Good to know
When the country of issue (supplier's region) and of receipt (client's region) of the invoice is the same, the taxes of the country in question apply, otherwise they are 0%.
Example: for an invoice issued from France to France, taxes such as VAT will be applied but for an invoice issued from France to Spain, no taxes will be applied.
Moreover, as a microentrepreneur, you may or may not be subject to VAT, i.e. you may or may not have to collect it from your customers and pay it to the State. Depending on your legal status and your turnover, certain thresholds apply. For more information and to find out the current thresholds, visit the tax site.
When your turnover exceeds the mentioned threshold (and it was not the case before), you have to modify the applied VAT. To do so:
- Go to My Details and click on Company Settings
- Click on Edit in the Invoicing details section
- In the Tax Status drop-down menu, select VAT instead of VAT Auto-entrepreneur
- Verify that the applicable VAT automatically changes from 0 to 20% and click Save
The VAT will now be visible and applicable from your next invoice.
Important
If you do not make this change in time, the invoicing process will be slowed down because the invoice will have to be re-issued.
This amount of VAT that you collect when you sell a good or service can then be reduced by an amount of VAT that you can deduct. An example of deductible VAT is the VAT paid when you incur business expenses (meals, tolls, etc. but not transportation or hotel expenses), which you can then report on your VAT declaration.
Important
The VAT on the expenses added to Activity Reports and reimbursed by clients cannot be deducted.
The notion of recoverable VAT on professional expenses is to be checked with an accountant: it is complex, and in many cases, it is not possible to recover the VAT on this type of expenses.
LittleBig Connection does not engage its responsibility on a VAT declarative error or bad accounting; this documentation is for information purpose only in order to explain the functioning of the LittleBig Connection platform and the re-invoicing of the professional expenses for their value including taxes.
Example:
- Invoice of a project: 20 days worked with a daily rate of 500€ excl. taxes = 10 000€ excl. taxes with 20% VAT or 12 000€ taxes included
- Professional expenses: 120€ including taxes, of which 20% VAT, i.e. 20€
| Type | Basis | VAT collected | Taxes included | Comments |
| Project | 10 000,00 | 2 000,00 | 12 000,00 | VAT recoverable because service via LittleBig |
| Re-invoicing professional expense | 120,00 | 0,00 | 120,00 | Expense re-invoiced including taxes |
| Professional expense | -100,00 | -20,00 | -120,00 | VAT recoverable as professional expenses are eligible |
| Total | 10 020,00 | 1 980,00 | 12 000,00 | |
| Total turnover | 10 120,00 |
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