Before the sales tax law was introduced in 1973, sales tax was known as value added tax. Sales tax is one of the types of traffic tax. Private consumers as well as public consumers are charged with sales tax when purchasing goods and services.
For the Entrepreneurs
Entrepreneurs can claim sales tax as input tax to the tax office if they use the goods and services charged with sales tax for business purposes. With the input tax deduction, the sales tax is paid back to them. The company’s profit is therefore not charged with sales tax. In return, however, entrepreneurs are obliged to levy sales tax on their deliveries and services and to pay the sales tax collected to the tax office. For this and for the input tax deduction, entrepreneurs have to submit a monthly, quarterly or yearly sales tax return to the tax office and pay the sales tax minus the input tax collected to the tax office.
Sales tax is levied on deliveries (e.g. goods) and other services (e.g. services). It is 7% (reduced tax rate) or 19%. The assessment basis for sales tax is the payment received for the delivery or service. Small businesses can be exempt from sales tax. In addition, certain professional groups (e.g. doctors) are excluded from the collection of sales tax. Using the sales tax calculator is important there.
The entrepreneur can deduct the following input tax amounts:
- The tax shown separately in invoices within the meaning of § 14 UStG for deliveries or other services that have been carried out by other entrepreneurs for his company
- The proportionate sales tax contained in advance payments for deliveries or services if the invoice is available and the payment has been made
- The import sales tax paid for items that have been imported into Germany for his company or that he uses to carry out sales (Section 1 (3) UStG)
- The tax for the intra-community acquisition of goods for his company
- The tax for services within the meaning of § 13b para 1 UStG that have been carried out for his company.
There is no delivery, import or intra-community acquisition of an object for the company if the entrepreneur uses this object / service less than 10% for his company.
Input tax amounts that are not deductible are also not deductible for the travel expenses of the employees of an entrepreneur (insofar as these are food costs, accommodation costs or travel costs for vehicles of the staff and the entrepreneur is not the recipient of the service) and relocation costs for a change of residence.
The following are also excluded from input tax deduction:
- Tax-free sales,
- Sales abroad that would be tax-free if they were exported domestically,
Free deliveries and other services that would be tax-free if they were performed for consideration
The sales tax for deliveries, imports and intra-community acquisitions as well as for other services for a property used as part of a business is excluded from input tax deduction according to Section 15 (1b) UStG, unless it applies to the use of the property for the purposes of the company.