Output VAT: debit or credit?
Output VAT increases on the credit side and decreases on the debit side: its normal balance is a credit.
Liabilities are amounts the business owes. They increase with a credit.
Name in each convention
Account names and codes follow each convention; an account that does not exist in a convention is not offered there.
| Convention | Account |
|---|---|
| United States (US textbooks) | — |
| Spain (PGC 2007) | 477 Hacienda Pública, IVA repercutido |
| France (PCG 2025) | 44571 TVA collectée |
| Germany (generic accounts) | Umsatzsteuer |
Practice entries that use this account
- Owner takes goods from stock for personal use
- Cash sale of merchandise (periodic inventory)
- Credit sale with a trade discount on the invoice
- Cash sale with cost of goods sold (perpetual inventory)
- Credit sale with cost of goods sold (perpetual inventory)
- Customer returns goods bought on credit (periodic inventory)
- Customer returns goods for a cash refund, restocked (perpetual inventory)
- Customer pays within the discount period
- Selling merchandise on credit with VAT
- Cash sales with VAT included in the price
- Invoicing a client for services rendered
- Service paid for on completion
- Receiving a customer deposit before the service
- Sale paid partly at once, partly on credit
- Writing off an uncollectible receivable directly
- Writing off a doubtful receivable that has an impairment allowance
- Recovering a receivable written off last year
- Receiving rent for a van rented out
- Selling a machine on credit at a gain
- Trading in an old delivery van for a new one
- Selling a machine at a gain, with VAT
- Settling VAT for the period
- Donating goods to a charity
- Credit sale, return, then payment within the discount period
- A machine bought, depreciated for a year, then sold
- Final invoice for a service after a deposit