In France, advance payments must always be replied with an acquitted invoice so it is somewhat a similar case.
To revive this topic a bit, cash basis is absolutely fundamental in France as, frankly, almost
every company that provides “services” uses it and it is by default as one must specifically
opt to use accrual with a formal declaration to the fiscal authorities.
If a supplier has opted for accrual-basis for services, he must add a specific clause to his invoices mentioning that fact.
NB: and yes, an invoice can actually have mixed taxes, accrual for the goods and cash for services.
What castaf@ mentioned in using 4458 is an age old means to easily support both mixed and pure case basis. I believe this method is used in many many companies.
Luckily, the tax plan already separates sales VAT by goods and services so it is well underway and can easily deal with these two cases, worst case adding the option 'tax accrual-basis for services ’ to the party accounting tab might help out here for the fringe cases.
Here I’d like to interject a problem I’m encountering with the tax codes that probably could/should be considered at the same time.
The use case with construction subcontractors in France where the prime contractor is responsible for liquidating taxes on behalf of his subcontractors, even if they are paid directly by the client.
Here, the subcontractor invoices the prime contractor without VAT (and mentioning ‘autoliquidation’)
The tax declaration for the subcontractor is somewhat easy, when paid, he indicates his invoice amount base as ‘other non taxable operations’.
The prime contractor will, when the subcontractor is paid, declare the subcontractors invoice amount base as ‘other taxable operations’, and will proceed add the invoices tax base to the appropriate VAT rate along with the rest of his proper invoices that are VAT exigible. He will also add the subcontractors invoice VAT amount to his VAT deductions for goods and services paid.
NB: worthwhile to mention that the VAT rate may different for the prime contractor’s client invoice then for the subcontractor’s invoice (e.g. certain renovation projects benefit a reduced VAT rate)
So far so good, but now the wrench thrown in to the mechanism.
Imagine there was an error in the subcontractor’s invoice and a credit note(or correction invoice) is issued to correct this.
VAT declarations in France disallow corrections in the VAT bases, so these corrections must be applied to a special line 21 ‘other deductible VAT (including collected VAT regularisations)’
credit note received in same period with payment corrected
In this case the bases can be corrected directly as nothing was declared ‘yet’
credit note received in a subsequent period after payment/VAT declaration
Then the bases cannot be corrected directly and must wait for regularisation of the payment either by compensation with a following invoice (if appropriate, such as with progress invoicing on a project) or by reimbursement.
The former can potentially be regularised in the VAT declaration via the bases, but the latter specifically means line 21 needs to receive the amount of the VAT to regularise following reimbursement.
The worst case, the subcontractor doesn’t repay or goes bankrupt, then it’s treated similarly.
(BTW this may also apply to unpaid clients invoices not only autoliquidated
Finally, the subcontractors invoice VAT amount needs to be subtracted from the VAT deductions for goods and services paid.
Perhaps it would be better to allow a company to disable tax code moves at least until cash-basis has support as it’s providing completely distorted data at the moment.