Are you a self-employed person? Then you probably already know: banking fees are part of the deal. Think of charges for your business account, transactions or bookings. You'll see these kinds of charges on your statement almost every month. But what about VAT? Is there VAT on bank charges? And can you actually reclaim it?
What about VAT on banking services?
Often the answer is very simple: There is no VAT on banking services. So, for example, do you pay for your account or a transfer? Then there is no VAT on that. And so that means you can't claim anything back on your VAT return. Banks usually put these costs on your statement without VAT. So you can easily see that there too.
But here, too, there are exceptions. For example, does your bank offer additional services, such as ATM rental or software use? If so, this may actually include VAT. So look carefully at the invoice. Does it mention VAT? Then you can simply reclaim it when you charge VAT on your turnover.
How do you account for bank charges?
Pay close attention when you book bank charges. There is a difference between charges without VAT and charges with VAT. Exempt expenses are entered without VAT. You often do this with the code 'exempt' or 0 percent. Is it about extra services with VAT, such as a payment terminal? Then you enter that VAT as input VAT in your tax return. And do you use software such as MoneyMonk? Then you usually see these costs easily and can quickly process them properly.
A real-life example
As an entrepreneur, do you pay 15 euros a month for your business account and there is no VAT on it? Then you book that as an ordinary cost. In that case, you cannot deduct VAT. Do you also rent an ATM through the bank and there is VAT on the invoice? Then you may deduct that VAT when you charge VAT on your turnover.
Conclusion
So most bank charges are without VAT. You may include them as costs, but you cannot reclaim VAT from them. Only for extra services from your bank that do include VAT, you can deduct the VAT. So always look carefully at your invoices or statements and process everything neatly in your accounts.
