Author Topic: Stoppage Tax  (Read 1994 times)

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Offline iankirk

  • Mossley, UK
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Stoppage Tax
« on: March 11, 2020, 08:42:13 AM »
Can anyone cast any light on stoppage tax (withholding tax). What services attract stoppage tax? I believe it can be paid via your bank or, if you've got plenty of time to spare, at the tax office. Are there any exemptions i.e. do sites (sitesi) have to pay stoppage tax for certain services. I assume stoppage tax is applied to labour services and not materials/goods?
Any insight into this would be most welcome.



Offline Phil

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Re: Stoppage Tax
« Reply #1 on: March 11, 2020, 15:38:50 PM »
It took me a while to work get my head round this “Witholding Tax” .

This is my current understanding of what this is all about. (But don’t take this as being the complete, definitive version).

Business A is a registered tax payer and employs the services of Mister B who cannot or won’t produce an official invoice (called a Fatura )

Business A wants ( or needs ) to account for the costs of the services of Mister B as a business expense.

Since Mister B is not going to account for the payment to the tax man, Business A has to pay the tax for him. This is what is called “Witholding Tax”.

A possible situation is that a Maintenance Company needs to show services as having been paid for in their accounts, but they have used non-tax paying workers. The Maintenance company would then pay the Tax on all the payments they show in their accounts.

There wouldn’t be any exemptions.

So the obvious question is why doesn't Company A use workers that will provide a Fatura. The answer is that  Mister B would then charge more if he is going to account for and pay his own tax.

In the end Company A probably pays the same either way.

I now wait to be severely corrected by others who probably know better than me…………….



Offline Phil

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Re: Stoppage Tax
« Reply #2 on: March 11, 2020, 19:33:43 PM »
As regards "goods" as opposed to "services" you can only claim back the VAT and offset the expense if the supplier has given you a Fatura.

This like an official VAT invoice in England. A Fatura details the supplier and it has their tax number. The VAT is shown separately. It also has to have your own Tax number on.
An ordinary till receipt from Migros is not acceptable. But if you ask for a Fatura and give them your details they will produce a Fatura.

I don't think witholding tax is relevant to goods.




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