How is VAT accounted for on continuous supplies like monthly subscriptions?
For subscriptions billed periodically, VAT is due at the earliest of: when you issue a tax invoice, when payment is due on that invoice, when you actually receive payment, or 12 months after the service was provided if none of those happened yet.
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The detail
Under Article 26 of the VAT Decree-Law, contracts involving periodic payments or consecutive invoices (such as monthly subscriptions) are 'special case' supplies for date-of-supply purposes. VAT is triggered at the earliest of: issuance of a tax invoice, the payment due date shown on that invoice, actual receipt of payment, or the expiry of one year from when the goods/services were provided if none of the other triggers has occurred.1
What the law says
- Article 26(1) sets the date of supply for contracts with periodic payments or consecutive invoices as the earliest of invoice issuance, payment due date, receipt of payment, or the one-year anniversary of supply.1
What it depends on
- The rule applies specifically where the contract factually and contractually involves multiple payments or consecutive invoices, as is typical for subscriptions.1
- If none of the four triggering events has occurred within 12 months of the goods/services being provided, the date of supply is automatically deemed to occur at that 12-month point.1
Check before you rely on it
- Confirm your subscription contract involves periodic payments or recurring invoices rather than a single upfront charge.
- Check invoice issuance dates and payment due dates against actual payment receipt to identify the earliest trigger each period.
Sources (1) — read the official text
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Article 26 - Date of Supply in Special Cases13
Read the article
Article 26 - Date of Supply in Special Cases13 1. The date of supply of Goods or Services for any contract that includes periodic payments or consecutive invoices shall be the earliest of any of the following dates: a. The date of issuance of any Tax Invoice. b. The date payment is due as specified on the Tax Invoice. c. The date of receipt of payment. d. The date of expiration of one year from the date the Goods or Services were provided. 2. The date of supply, in cases where payment is made through vending machines, shall be the date on which funds are collected from the machine. 3. The date of Deemed Supply of Goods or Services shall be the date of their supply, disposal, change of usage or the date of deregistration, as the case may be. 4. The date of a supply of a Voucher shall be the date of issuance or supply thereafter. Chapter Two – Place of Supply
Written by AI from the FTA sources above and checked before display. Not tax advice or official FTA information - confirm with a tax adviser before you act. Full disclaimer
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