One of our accounting clients has asked us about issuing invoice to reimburse the expenses that they initially paid on behalf of their clients and whether they need to charge VAT on top of the amounts.
As our response, we advised our client that there are two ways to issue invoice for reimbursement of expenses. One is that they need to keep all the receipts of expenses paid on behalf of their client and as their accountant, they should let us know about it before we prepare the monthly accounting so that we will not claim back the VAT for them and we will book them as accounts receivable and not as expense, then when they invoice their client to reimburse the amounts, they do not have to charge VAT.
Another way is that if it is not practical to get all the receipts of the expenses paid on behalf of their clients, they need to charge VAT when they invoice for the reimbursement.
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