I'm currently working as a web developer on the flat-rate regime, but over the past few months I've had more clients than usual and I'm earning more than 5k euros a month. An accountant told me I could save money by switching to regular VAT, but I don't really understand how it works. Has anyone here made this switch? Is it actually worth it?
Whether to switch depends a lot on how much you're earning and how many clients you have. If you're consistently over 5k euros a month, it's worth seriously looking into standard VAT because with the flat rate you're paying tax on your entire turnover anyway (after the flat-rate deduction), whereas with VAT you can deduct what you pay on expenses and materials. But heads up: with standard VAT you've got more bureaucratic obligations, you have to issue VAT invoices, file VAT returns quarterly or monthly, and your accountant will cost you more than it does now. It's not a decision you make on the fly.
Your accountant can calculate the real benefit using your exact numbers: the cost of the tax structure (accountant included), the expenses you can deduct, your overall tax burden. I'd read through the quote they gave you and ask them in writing exactly how much you'd save monthly by making the switch. There's also another thing to consider: are you sure you'll keep earning at this level? If it's just a temporary phase, switching might not be worth it. But if it's stable and growing, then yeah, going for standard VAT makes sense.
One thing people often overlook: with the flat rate you're "simple" to manage and attract less attention, while standard VAT puts your numbers more on display. It's not a bad thing, but it's extra bureaucratic stress. Talk to your accountant again and get them to put together a comparison document, not just their opinions. And anyway if you decide to switch, do it from the start of the fiscal year - it's less of a headache.
Don't let yourself be guided just by how much you earn each month because the choice depends on a ton of variables: how many clients you have, how much you spend on tools and services (servers, software, etc.), how your earnings are distributed throughout the year. Your accountant is right that with regular VAT you can recover VAT on expenses, but you also need to consider that it increases bureaucracy and reporting obligations, and it's not always worth it if most of your clients are individuals (they don't bring you VAT credits). A lot of developers stay in the flat-rate regime even above 5k a month because the simplicity is worth more than the theoretical savings, while others make the switch because they have important business clients. Before you decide, ask your accountant to run an actual simulation with your real numbers from last year, not just generic theory.
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