What is the "cash basis" in accounting?

Generic explanation:

VAT is an amount that is to be paid or recovered only at the time of payment.

Ex: I encode an invoice on January 16th. I receive payment for this invoice in March.

I will only be able to recover or I will have to pay my tax at the time of the declaration of the month of March, that is to say the one that must be sent at the latest on the 20th of the following month, April.

 
If you activate the "cash basis" option, you will get a new field on account.tax that asks you to choose whether you want to base your tax on the invoice date or on the payment date. On a tax code (account.tax), when the invoice is encoded, the VAT must be calculated but the amount of the VAT must be posted to an intermediate account (the time the payment has not been encoded). When the payment has been posted, this VAT amount will be included in the VAT return.

Warning: The Cash Basis MUST NOT be activated for Belgium.

Explanation: In Belgium we use the invoice date!

In Belgium, when an invoice is encoded, the VAT is due according to the invoice date.

Let's take a practical example:

The monthly return of January. If for example I encode an invoice dated January 16th, the VAT will have to be sent in the return at the latest on the 20th of the following month, February 20th (if monthly VAT - if quarterly for the 20/04). The VAT is due for this date.

For purchase invoices, the VAT will be recovered also on the 20th of the following month.

Important:

Some VAT is not 100% deductible. For example, you can never recover the VAT on a restaurant ticket in the VAT.

On the other hand, it can be deducted in the taxes but this is totally different.

What happens to invoices received from our suppliers with an invoice date that comes from a closed VAT return?

If we closed the January return, we would have to send it in February at the latest. It is likely that we receive invoices from January so it is February 26 or later. Therefore, we have to encode the accounting date (of the invoice) in January. Nevertheless, we will still be able to integrate the VAT in a next return because we can still recover it for a period of 3 years.

=> In summary: In Belgium, we retain the VAT on the basis of the invoice date.