Greece introduces cash accounting for VAT
Greece is to follow countries like Spain with a cash-based VAT option as opposed to the commonly accepted accruals-based reporting regime. The new regime came into effect on 1 October 2014, and requires eligible companies to apply ahead of the forthcoming financial year.
The new Greek VAT system will only be available to smaller companies – with an annual turnover of below Euro 500,000 per annum. Excluded from this figure are non-taxable supplies such as: exports; intra-community supplies, reverse charge and nil or exempt supplies. In additional, applicants must be fully up-to-date with their tax filings and payments.
Companies adopting the cash accounting regime will only have to pay over to the Greek authorities any VAT charged when their sales invoices are paid. Likewise, any customers of companies operating the cash-based VAT system will be able to offset their input VAT only once they have settled the invoice. This is irrespective of whether or not they themselves are reporting under the cash or accruals systems.
Any invoice applying the cash accounting rules must indicate so, and the effective tax point will be regarded as the bank or cash receipt date. For credit notes, the same principle applies – VAT refunds may only be recognized when the original invoice amount is refunded.