If you're a small seller, the VAT you owe on a sale you haven't been paid for yet is money you don't actually have. Most VAT systems don't care about that -- they charge you the moment you issue the invoice, whether or not the customer has paid. Several EU countries offer an alternative specifically for small businesses: VAT becomes due when you're actually paid, not when you bill. The catch is that every country calls it something different, and mixing up the rules (or the terminology) is an easy way to file incorrectly. And knowing the rule is the easy part -- knowing the exact date, for every invoice, means matching it to the bank transaction that actually paid it. That matching step is the part most small sellers end up doing by hand, or paying someone else to do, even though getting it right is the whole reason cash-basis VAT helps your cashflow in the first place.
Cash-basis vs. accrual-basis VAT, in plain terms
Under the standard (accrual) rule, VAT is due in the period you issue the invoice -- regardless of when, or whether, you get paid. Under cash-basis VAT, it's due in the period you actually receive payment. For a small seller with real payment-timing gaps (a customer who pays net-30, a marketplace payout that lands weeks after the sale), that difference is real cash flow, not just an accounting technicality.
Three things are consistent across every country that offers this: it's opt-in (or automatic below a threshold, but not forced on larger businesses), it's aimed specifically at small businesses, and getting the period wrong -- booking VAT to the invoice date instead of the payment date -- means your VAT return doesn't match what actually happened.
Germany: Istbesteuerung
Germany's cash-basis option is called Istbesteuerung (also written Ist-Versteuerung) -- "actual taxation" -- under §20 UStG, as opposed to the default Sollbesteuerung ("target taxation," accrual-basis) under §16 UStG. It's available to small businesses under the relevant turnover threshold. VAT on both sales and deductible input VAT on incoming invoices is due in the period the payment happens, not the period the invoice is dated.
Poland: Metoda kasowa
Poland's version is metoda kasowa ("cash method"), available to a mały podatnik (small taxpayer -- gross sales up to roughly €2,000,000, a threshold set annually in PLN). VAT is settled on the date payment is actually received, and sales invoices issued under this method must carry the phrase "metoda kasowa" on the invoice itself. One wrinkle worth knowing: for sales to consumers and other non-VAT-registered buyers, VAT is still due no later than 180 days from delivery, whether or not you've been paid by then.
France: TVA sur les encaissements
France splits this by business type rather than a single opt-in scheme. Goods sellers generally use TVA sur les débits (VAT due on the invoice date). Service providers generally use TVA sur les encaissements (VAT due on the date payment is collected) -- cash-basis by default for services, not something you have to specifically opt into. A service business can elect to use débits instead if that's simpler for their situation, but encaissements is the standard starting point.
Where this goes wrong in practice
Almost every mistake here comes from the same root cause: a bookkeeping process (manual or automated) that buckets a transaction into a VAT period using the invoice date, because that's the date that's easiest to read off the document -- even when the seller is legally required to use the payment date instead. It's an easy mistake to make consistently, invoice after invoice, without anyone noticing until a tax authority query or a year-end reconciliation surfaces the gap.
The hard part isn't knowing the rule -- it's knowing the date
Understanding that VAT is due on the payment date instead of the invoice date is the easy part. The hard part is knowing, for every single invoice, exactly which bank transaction paid it and on what date -- especially once partial payments, batched marketplace payouts covering dozens of orders at once, or small amount mismatches (bank fees, rounding, early-payment discounts) are in the mix. Get that match wrong and the whole point of cash-basis VAT falls apart: you're back to guessing at deadlines instead of knowing them.
This is where most small sellers hit a wall. Matching bank statement lines to open invoices by hand takes real time every single period, and most accounting tools that automate it are priced -- or scoped -- for businesses well past the small-seller stage. The common fallback is paying a tax accountant specifically to do this reconciliation, which works, but adds a recurring cost just to answer a question -- which period is this VAT actually due in -- that a well-built system should be able to answer directly, without a manual pass or an extra invoice from your accountant.
That reconciliation gap also has a direct cashflow cost, which is easy to miss. If you can't cleanly tell which invoices are actually paid, the safe move is to set VAT aside as if everything were accrual-basis anyway -- which cancels out the cashflow benefit cash-basis VAT is supposed to give you in the first place. Accurate, up-to-date matching is what lets you actually hold onto that money until the period it's really due, instead of over-provisioning "just in case" or getting an unpleasant surprise when a reconciliation finally happens months later.
How this is handled in Vedron today
For German Istbesteuerung specifically, this is already built and verified: every invoice is automatically matched against real bank transaction records to find its actual payment date, and VAT reporting uses that matched date -- falling back to other signals only when no payment match exists yet, never the invoice date by default. That's not a theoretical description; it's the same logic that corrected real historical documents that had been mis-bucketed by invoice date before the fix, without anyone manually reconciling a single line by hand. The same payment-date-priority architecture -- automatic bank-to-invoice matching, not just a payment-date field you'd still have to fill in yourself -- is what a Polish metoda kasowa or French TVA sur les encaissements implementation would build on; the pattern already exists, extending the specific tax categorization to those countries is the remaining work, not a redesign.
Frequently asked questions
Can I switch to cash-basis VAT at any time?
That depends on your country's specific rules and thresholds -- generally there are eligibility conditions (turnover limits, business type) and sometimes a minimum commitment period. Check with your tax advisor before switching.
Does cash-basis VAT change what I owe, or just when I owe it?
Just the timing -- the total VAT liability over time is the same either way. What changes is which period a given sale's VAT lands in, based on payment date instead of invoice date.
What happens to unpaid invoices at year-end under cash-basis VAT?
VAT on an unpaid invoice generally isn't due yet under cash-basis rules -- it becomes due in whichever future period the payment actually arrives (subject to country-specific backstops like Poland's 180-day B2C rule above).
Do I have to manually match every payment to its invoice myself?
Not with Vedron -- that manual matching step is exactly the part that normally forces small sellers into either doing bank reconciliation by hand every period or paying a tax accountant just to get the correct VAT period. Vedron matches bank transactions to invoices automatically, so the payment date used for VAT reporting is already resolved for you, not something you have to reconstruct yourself.
Does this actually help cashflow, or just save bookkeeping time?
Both, and the two are connected. Without confident payment-to-invoice matching, the safe default is to set VAT aside as though every invoice were accrual-basis -- which erases the cashflow advantage cash-basis VAT is meant to give you. Automatic matching is what lets you actually rely on the payment-date rule day to day, so cash you haven't collected yet doesn't get set aside as if you had.
Have a question specific to your setup?
Every seller's marketplace mix and stock setup is a little different -- if you're weighing this against your own, book a short call and we'll walk through it with you directly rather than leaving you to figure it out from a blog post alone.
Beta offer: if you join as a beta client, custom integration setup -- configured for your actual marketplace and inventory mix -- is free for your first 2 months.
Still evaluating and need more time than the standard trial window? Just ask us for an extension -- we're happy to give you the room to actually test it properly before deciding.