If a hotel receives prepayments from its customers, the VAT for this income must be declared in the same month it is received (subject to local tax legislation).
The way a deposit is shown on the final invoice is frequently a controversial subject between tax officials and hotelier. Usually, the deposit is deducted from the invoice amount. However, the VAT paid already must be shown separately or tax office will demand the taxes for the deposit a second time.
This chapter shows the correct way to handle taxation on deposits, creating an invoice for the deposit-entry and a final invoice.