A VAT roundtable is an important check at the end of the fiscal year. With this you check whether the VAT that you have entered in the accounts matches the VAT that you have submitted in the VAT returns. By performing this check you can avoid discrepancies, incorrectly booked VAT and problems with the annual accounts or during an audit by the tax authorities.
This comprehensive guide tells you what a VAT rounding account is, why it’s important and how to create one yourself step by step. You’ll find a complete Excel-style VAT rounding account example, practical explanations, and an overview of common mistakes in practice.
What is a VAT circular account?
A VAT statement is a statement where you put all the VAT amounts for the fiscal year side by side. You compare the VAT in your records with the VAT you declared. With this you check whether:
- the VAT in your accounts has been correctly accounted for
- the VAT returns are properly posted
- the balance sheet items VAT payable or receivable are correct
The VAT reconciliation is the bridge between your records and your VAT returns. Without it, it is impossible to close the fiscal year without error.
Why is a VAT circular account important?
A VAT recap prevents errors and ensures reliable financial reporting. It is important to perform VAT reconciliation annually or quarterly because:
- the reconciliation between records and VAT returns is checked
- errors are detected early before the financial statements are prepared
- balance sheet items do not remain unjustifiably open
- the accountant gets an accurate substantiation of your VAT records
- you avoid risks such as additional taxes, fines or corrections
Many business owners experience discrepancies in their VAT records without realizing it. The VAT roundtable prevents this.
How do you create a VAT circular account?
A VAT circular account consists of four steps.
Step 1: Collect all VAT returns for the year
List by period:
- VAT on sales (headings 1a and 1b)
- VAT on costs (section 5b)
- the balance of VAT payable or receivable
- any corrections such as supplements
Step 2: Collect VAT entries from your records
Export the following balance sheet accounts:
- VAT to be claimed
- VAT payable
- Settlement account VAT
Step 3: Create a VAT circular account in Excel
The VAT rounding account example below shows what this looks like in practice.
Sample VAT circular account
| Period | VAT sales (1a/1b) | VAT costs (5b) | Payable or received | Booked into administration | Difference |
|---|---|---|---|---|---|
| Q1 | € 8.450 | € 4.200 | € 4.250 | € 4.250 | € 0 |
| Q2 | € 10.120 | € 5.520 | € 4.600 | € 4.500 | € 100 |
| Q3 | € 9.880 | € 4.900 | € 4.980 | € 4.980 | € 0 |
| Q4 | € 11.400 | € 5.340 | € 6.060 | € 6.060 | € 0 |
| Total fiscal year | € 39.850 | € 19.960 | € 19.890 | € 19.790 | € 100 |
In this example, a difference of €100 arises in Q2, usually indicating:
- incorrectly posted VAT
- unprocessed corrections
- reverse charge VAT not accounted for
- invoices processed late
Step 4: Connect the VAT balance account
The total count of your VAT circular account must match:
- VAT payable
- VAT to be claimed
Is this not the case? Then you must identify and correct the discrepancies.
Common mistakes in VAT rounding
- Incorrectly booked VAT such as 21 percent booked as 9 percent
- Missing adjustments such as private use or investment VAT
- Unprocessed reverse charge VAT in international trade
- VAT on investments not properly accounted for
- Non-consecutive VAT balance sheet accounts
Ready to improve your VAT circular account?
Do you want your VAT records to always be reconciled and error-free? We are happy to help you with administration, VAT audits and year-end closing.
About the authors: the financial expertise of Daniel Thijs and Richard de Ruijter RC
This explanation is based on the practical experience of Daniel Thijs and Richard de Ruijter RC, the financial specialists behind Oakhill Financial Services. They support companies daily with VAT audits, administration, reporting and year-end closing.
Daniel Thijs works as a fractional CFO and controller. He specializes in VAT processes, financial steering, reporting and administrative optimization. Daniel helps entrepreneurs make their financial administration transparent, scalable and reliable.
Richard de Ruijter RC is Chartered Controller and an expert in compliance, controlling, reporting quality and internal control. Richard guides organizations in strengthening financial processes and ensuring quality in their reporting structure.
Together they combine strategic and operational expertise with which they help business owners structure their administration and make VAT processes error-free.
Frequently asked questions about the VAT circular account
What is a VAT circular account?
A VAT reconciliation checks whether the posted VAT matches the VAT returns for the fiscal year.
How does a VAT circular account work?
You place the VAT from the returns per period next to the VAT entries in your administration and compare them. You correct differences before the year-end closing.
How may you round up VAT?
You round off VAT to two decimal places. In the VAT return, you round off to whole euros. Rounding is done according to arithmetic rules.
Is VAT a balance sheet account?
Yes. VAT is recorded in VAT payable or VAT receivable. It is a debt or receivable, not an expense.
How do you calculate 21 percent VAT?
Excluding VAT × 0.21 = VAT amount. Excluding VAT × 1.21 = amount including VAT.
How do you extract VAT from an amount including VAT?
At 21 percent VAT: VAT = amount including VAT × 21 / 121 Excluding VAT = amount including VAT / 1.21
When do you create a VAT circular account?
At least annually, but ideally quarterly for better monitoring.
Is there a VAT roundtable in Excel?
Yes, most controllers use Excel. There is a complete example in this blog that you can copy.