Sales tax is generally also known as value added tax. It applies in particular to
- Deliveries and other services,
- the import of goods from non-EU countries - the resulting import VAT is collected by customs - and
- the purchase of goods from European Union countries, the so-called intra-Community acquisition.
The amount of tax varies depending on the type of goods or other services supplied:
- general tax rate: 19 percent
- Reduced tax rate: 7 percent, applies for example to
- the supply of almost all foodstuffs, with the exception of drinks and restaurant sales (please also note the exceptions below)
- for local passenger transportation,
- the transportation of passengers by rail, and
- for sales of books and newspapers.
Due to the coronavirus pandemic, the following exceptions applied or apply
- temporary reduction in tax rates from 19% to 16% and from 7% to 5% from July 1, 2020 to December 31, 2020
- for restaurant and catering services - with the exception of beverages - the following applied or will apply
- the tax rate of 5% from July 1, 2020 to December 31, 2020 and
- the tax rate of 7% from January 1, 2021 to December 31, 2022.
- From January 1, 2023, restaurant and catering services will be subject to a tax rate of 19%.
You must pass on the VAT for your business to the tax office. In return, however, you can regularly reclaim the input tax, i.e. the VAT on incoming invoices. You calculate the difference in the advance return.
Advance return period
If the VAT for the previous calendar year was more than EUR 7,500, you must submit monthly advance VAT returns in the current year.
If the total VAT for the previous year was more than EUR 1,000 to EUR 7,500, you must submit the advance return on a quarterly basis.
If it was not more than EUR 1,000, the tax office may exempt you from submitting advance VAT returns. In this case, you only have to submit an annual return.
If there was a surplus in your favor of more than EUR 7,500 for the previous calendar year, you can choose the calendar month as the advance return period instead of the calendar quarter.
If you are the founder of a company and are starting a professional or commercial activity for the first time, you must submit monthly advance VAT returns in the year the company is founded and in the following calendar year. However, this regulation has been suspended for the years 2021 to 2026.
You are not obliged to submit a monthly advance VAT return when setting up a new business if
- you only carry out VAT-exempt transactions for which no input tax deduction is possible
- you apply the small business regulation or
- you make use of the special regulation for flat-rate farmers and foresters.
If you are setting up a new business in the years 2021 to 2026, the expected tax for the current calendar year is decisive with regard to the above-mentioned amount limits. In the following year, the actual tax of the previous year must be converted into an annual tax.
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