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Solving problems: indicating that VAT is not deductible
Solving problems: indicating that VAT is not deductible

How to deal with non-deductible expenses when calculating taxes

Rocío avatar
Written by Rocío
Updated over a year ago

What is the problem?

When I create a purchase invoice in Holded I don't know how to put that VAT cannot be deducted. Also, I don't know how to assign the accounting account for non-deductible expenses.

How to solve it

Create a new tax assigned to a group 6 account to use on your purchase invoices. Here are the steps:

Create a new non-deductible tax

  1. Go to Settings from the Control Menu

  2. Click on Taxes under Invoicing

  3. Click on the New Tax button

    This step will allow you to create a 21% / 10% / 4% purchase tax in Holded and assign it to the corresponding expense account 6. This will prevent it from defaulting to a 477 account.

  4. Under Name, type something distinctive like non-deductible VAT 21%, or whatever percentage is appropriate.

  5. In the drop-down under Scope, select Purchasing

  6. Under Tax account and Tax account (corrections), select the account to apply from group 6.

  7. Validate that the selected option in Type is Percentage

  8. Indicate the VAT percentage in Amount %.

  9. Click Show more

  10. Validates that the option None is selected under Tax Group

  11. Click Create

Use the non-deductible tax on your purchase invoice

  1. Create or edit your purchase invoice

  2. In the concept lines add two lines

  3. On line 1 add the concept with the deductible VAT

  4. On line 2 add the concept with the non-deductible VAT (the one you have created manually)

Verification: check the journal entry and the tax details

  1. Go to Journal from Accounting

  2. Click on the generated journal entry to view the data

  3. Go to Tax from Analytical

  4. Validate the information in the VAT table

  5. Click on Templates to review the data

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