Each turnover is ultimately only charged with sales tax once and the sales tax is only final for the end consumer. The prerequisite for the input tax deduction is an invoice that meets all formal requirements.

Taxation procedure:

  1. General: The sales tax is an annual tax, but there is several times (monthly or quarterly) sales tax returns during the year submit and make advance payments. In addition, recording obligations must be observed.
  2. Tax arisen: The tax liability normally arises at the end of the pre-notification period in which the service was carried out (taxation according to agreed fees, target taxation), but for smaller companies, taxation upon receipt of the payment is upon request (taxation according to received fees; actual taxation) possible. However, down payments are generally taxable at the time of payment (so-called minimum actual taxation). If, in the case of target taxation, the fee actually received deviates later from the agreed fee, the tax liability can be corrected accordingly.

As a rule, the tax debtor is the supplier, but in certain cases the tax may have to be withheld and paid by the purchaser (as stipulated uniformly in the EU for certain other cross-border services, cf. in German law § 3a III, IV UStG and the reverse charge procedure). As you calculate sales tax do consider using the online tax calculator in this case.

Invoicing:

  • The entrepreneur has to issue an invoice for the tax due with a separate sales tax certificate to provide the recipient with proof of how much input tax is based on the services he has purchased. Since the possession of an invoice with a sales tax ID documents a financial claim (for input tax) against the tax authorities for the recipient, the law for better control of these processes insists that the invoice must meet strict sales tax formal requirements. These can be found standardized in §§ 14,14a UStG; Even slight formal errors can make the input tax deduction for the invoice recipient fail (§ 15 I No. 1 sentence 2 UStG). 
  • This explains the custom (since the tightening of the regulations in 2004) of returning invoices with formal errors to the issuer with a request for correction.

Conclusion

The value added tax , in the tax context as sales tax called, marks the added value that is created within a production process as a value. Understood? Then simplified: only the added value of the goods is taxed. The VAT is payable in the moment when domestic goods or services are supplied or delivered against payment. If the goods are resold, the value added tax, which was incurred in advance as an expense, can be offset against the income.