X2.2 - VAT

Question 1

What is VAT?

Answer 1

Value Added Tax—is a type of consumption tax applied on the sale of goods and services.

The percentage of VAT you pay usually depends on what product or service
you’re buying.

In Spain, there are 4 rates, the main one being 21%

VAT is a regressive tax, meaning that everyone pays the same rate, and it
doesn’t take into account different incomes.

This is one of the reasons why there are reduced rates.

Question 2

Types of VAT

Answer 2

Question 3

How does VAT work?

Answer 3

1. You pay VAT on goods purchased.
2. you charge VAT on goods sold.
3. You pay the difference to the govt.

This means you essentially are a tax collector

Question 4

Sales Forcast

Answer 4

Sales forcasting is mainly educated guessing, wont be perfect by should be resonable, Must to market research first to help with this.
1. Estimate how much you will sell
Think about how many items or services you can sell each month after 6 months.
Start with ZERO sales in the first month and slowly increase to the goal by month 6.
2. Decide the Price
set the price for each item ir service you will sell.
3. Math Equation
Number of sales x Price = Earnings

Question 5

VAT Calculations (Examples)

Answer 5

1) Buying Materials
Materials cost: €10,000.
VAT (21%): €2,100.
Total Cost: €12,100 (you pay this amount to the supplier).

2)Selling Your Product:
Selling price: €30,000.
VAT (21%): €6,300.
Total Sales: €36,300 (this is what your customer pays you).

3) VAT Difference:
VAT collected from sales: €6,300.
VAT paid to suppliers: €2,100.
Difference: €6,300 - €2,100 = €4,200.

4)Paying the Government:
At the end of the trimester, you pay the VAT difference (€4,200) to the government.