Online advertising is currently one of the most popular forms of business promotion. Two platforms dominate this field - Google Ads and Facebook Ads. These services let you reach an extremely wide audience thanks to the enormous reach of both Google and Facebook.

Summary & key takeaways

  • Buying Facebook Ads and Google Ads counts as an import of services, with 23% VAT to add.
  • Invoices can be downloaded directly from your Google Ads or Facebook Ads account.
  • VAT payers book the import of services with an internal invoice in both purchase and sales registers.
  • Non-VAT payers pay the VAT due by the 25th of the following month and file a VAT-9M return.
  • VAT paid this way can count as a tax-deductible cost.

Although many marketing companies offer this solution to their clients, what exactly does promoting a website through Google Ads and Facebook Ads look like from an accounting point of view?

What are Google Ads and Facebook Ads?

Google Ads and Facebook Ads serve the same essential function, but they use different platforms to do so. Before we move on to how these options are accounted for, here is an introduction:

Google Ads, until recently known as Google AdWords, is a system that allows adverts to be displayed in Google search results for specific keywords. Using the Google AdSense feature, these adverts can also be displayed on other websites. What is very important from an accounting perspective, with a Google Ads advert you only pay when a user clicks through the advert. Google Ads users set their own campaign budgets, and the invoice is available directly from the Google Ads account.

Facebook Ads, on the other hand, allows you to place adverts on the Facebook platform, which lets you reach a very wide audience given the popularity of this social network. In many respects, however, it works similarly to Google Ads, including when it comes to invoices, which are available directly in your account.

The Facebook Ads process

To buy advertising on Facebook, which as a company is based in Ireland, we go through an intra-Community acquisition of services, regardless of whether we use Facebook Ads in the UK or in Poland. As we mentioned earlier, the accounting is done using an invoice, which is easily accessible from the account view. You need to remember, however, that the invoice shows the net amount. To account for it correctly, you must additionally charge VAT at 23%.

To account for Google Ads, go to the “Billing and payments” tab in the settings menu located in the top panel. There you will find the “Summary” tab, from which you can go directly to the “Transactions” menu. Here you have access to data from the last three months (this period can be changed in the main menu), including the VAT invoice. The document can be downloaded from here in PDF format.

A Google Ads invoice contains three main items: a prepayment for Google Ads, Google Ads, and funds from the Google Ads prepayment. The first of these, the prepayment, means we will be charged VAT on the import of services - as with Facebook Ads, it is 23%. With the second item, we pay for Google Ads costs incurred, which is recorded as a business expense in the revenue and expense ledger (KPiR). The third item gives us information about the status of the prepayment settlement and is not booked.

When accounting for a Google Ads invoice as a VAT payer, you should book it as an import of services by issuing an internal invoice. It should include the invoice number, the issue date, the prepayment amount and the name of the service. VAT of 23% must additionally be charged here. It is also worth mentioning that you are required to enter the service in both the purchase and sales registers. This means it generates neither profit nor loss, making it a neutral service.

Purchasing services by businesses exempt from VAT

For both Facebook Ads and Google Ads, non-VAT-registered businesses can receive an invoice for the purchase of services in the same way as VAT payers. So we pay the internal invoice, but we must additionally pay the charged VAT amount to the appropriate tax office by the 25th day of the following month. On top of that, a VAT-9M declaration must be filed, showing this payment. It is worth mentioning here that tax paid in this way can count as a tax-deductible cost.

Most companies offering Google Ads and Facebook Ads services can handle the formalities arising from running campaigns for you. Experts will help you manage your campaigns well, so that you not only make the most of their potential but also don’t have to worry about the accounting side of things.

PolAccount

Accounting for Polish businesses in the UK

A team of Polish accountants and tax advisors with years of experience supporting businesses operating in the United Kingdom.

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