VAT on Collection (Cash Accounting): What It Is, Who Applies It, and How It Appears on the Invoice

VAT on collection (cash accounting for VAT) changes the moment you owe VAT to the state: not when the invoice is issued, but when it is collected. It’s useful for companies that collect payments late — you don’t pay VAT on money you haven’t received yet.

How chargeability works

Under the normal regime, collected VAT becomes chargeable on the invoice date (regardless of whether you’ve been paid or not). Under the VAT-on-collection system, chargeability moves to the moment of collection:

• Collected VAT — you owe it when the client pays the invoice;
• Deductible VAT — you can deduct it, symmetrically, when you pay your suppliers’ invoices.

In practice, the VAT rhythm follows the money, not the documents.

Who can apply it

The system applies based on an option and conditions (mainly related to turnover, within the thresholds set by law). There are also exceptions — certain operations don’t fall under VAT on collection even if the company applies the system. That’s why, if you’re under this regime, it matters that your invoicing software correctly marks every invoice.

What mention appears on the invoice

An invoice issued under this system must contain the mention “VAT on collection.” In e-Factura, the special VAT regime is reflected in the XML structure (the VAT category/regime), so that reporting is correct.

How it works in facturifirma

In facturifirma you can mark VAT on collection at company level and on the invoice, and the app adds the mention and correctly sets the VAT regime in e-Factura. When you record the payment, you have a record of the moment VAT becomes chargeable — useful for the VAT report and for preparing your return.