Set up unrealized VAT
Business Central provides the options to process unrealized VAT. VAT is typically calculated when the invoice is created but isn't due or realized until the invoice is paid.
To process unrealized VAT, the Unrealized VAT check box must be selected on the General Ledger Setup page.
You can define how and when VAT is realized in the Unrealized VAT Type field on the VAT Posting Setup page. If the default value is blank, unrealized VAT isn't calculated for the combination of the VAT business and the VAT product posting groups.
If you must calculate unrealized VAT, the following five options are available:
Percentage - Each payment covers both VAT and the invoice amount in proportion to the payment's percentage of the remaining invoice amount. The paid VAT amount is transferred from the unrealized VAT account to the VAT account.
First - Payments cover VAT first and then invoice amounts. The amount that is transferred from the unrealized VAT account to the VAT account equals the payment amount until the total VAT is paid.
Last - Payments cover the invoice amount first and then the VAT. No amount is transferred from the unrealized VAT account to the VAT account until the total amount of the invoice, excluding VAT, is paid.
First (Fully Paid) - Payments cover VAT first (as in the First option), but no amount is transferred to the VAT account until the full VAT amount is paid.
Last (Fully Paid) - Payments cover the invoice amount first (as in the Last option), but no amount is transferred to the VAT account until the full VAT amount is paid.
After you have selected Unrealized VAT Type, enter the accounts that unrealized VAT posts to in the following fields:
Sales VAT Unreal. Account
Purch. VAT Unreal. Account
Reverse Chrg. VAT Unreal. Acc.