Turnover tax / Input taxLevying turnover tax
The turnover tax [Umsatzsteuer] (also known as VAT [Mehrwertsteuer]) is incurred whenever you sell goods or services. The general rate is 19 percent. The reduced rate of 7 percent applies, e.g. to services by artists, journalists or translators. Not subject to turnover tax are certain professional groups, such as e.g. doctors, physiotherapists, insurance brokers.
You have to post turnover tax separately in your invoices. Please observe the information on what an invoice needs to include.
You have to pay the turnover tax to the tax office.
Paying input tax
On (almost) all company-related purchases you pay input tax [Vorsteuer]. Please ensure that this is separately posted (as turnover tax) on the invoices you have to pay. These input taxes can then be offset against the turnover tax you have to pay to the tax office at a later date.
Advance turnover tax notification
In the advance turnover tax notification [Umsatzsteuervoranmeldung] you state both the turnover tax, which you have received, and the turnover tax (input tax), which you have paid for your purchases. Only the difference between the turnover tax and input tax is then paid to the tax office.
As a rule, the so-called target taxation always applies to turnover tax: you have to pay the turnover tax to the tax office as soon as you have sent the invoice to the customer and not when he/she has paid you. For turnovers of up to 250,000 euros – on request – an actual taxation is also possible. In such case you pay the turnover tax when the customer has actually paid it and not on the invoice date. In East Germany the target taxation is only obligatory as of a turnover of 500,000 euros.
Start-ups have to submit their advance turnover tax notifications monthly during the first two calendar years, and that by the 10th day of the following calendar month. On request, the tax office can extend the deadline by one month.
The electronic advance turnover tax notification is obligatory for companies. The officially prescribed printout can be found at www.elster.de (www)
An annual statement of your turnover tax ensues with your turnover tax return to the tax office responsible for your company at the end of the calendar year.