Sales tax is also commonly referred to 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 countries of the European Union, the so-called intra-community acquisition.
The amount of tax varies depending on the type of goods supplied or other services performed:
- general tax rate: 19 percent
- reduced tax rate: 7 percent, applies, for example, to
- the supply of almost all foodstuffs, except for beverages and restaurant sales (note also the exceptions below),
- for local passenger transport,
- the transportation of passengers by rail, and
- for sales of books and newspapers.
Due to the Corona pandemic, the following exemptions were or are in effect:
- Temporary reduction of tax rates from 19 to 16 percent and from 7 to 5 percent from July 1, 2020 to December 31, 2020.
- for restaurant and catering services - with the exception of beverages - the following exemptions applied or will apply
- from July 1, 2020, to December 31, 2020, the tax rate of 5 percent, and
- from January 1, 2021, through December 31, 2022, the 7 percent tax rate.
- As of January 1, 2023, restaurant and catering services will be subject to the 19 percent tax rate.
You will have to pass on the sales tax for your business to the tax office. In return, however, you can regularly reclaim input tax, i.e. sales tax on incoming invoices. In the advance return, you calculate the difference.
Period of advance return
If the VAT for the previous calendar year exceeded EUR 7,500, you must submit advance VAT returns on a monthly basis in the current year.
If the total of the previous year's VAT exceeded EUR 1,000 and amounted to EUR 7,500, you must submit the advance return on a quarterly basis.
If it did not exceed EUR 1,000, the tax office may exempt you from submitting advance VAT returns. In this case, only one annual return must be submitted.
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 business and are starting a professional or commercial activity for the first time, you must submit monthly advance VAT returns in the year the business is founded and in the following calendar year. However, this regulation has been suspended for the years 2021 to 2026.
You are not required to submit a monthly advance VAT return when starting a new business if
- You only carry out sales that are exempt from sales tax and for which no input tax deduction is possible,
- you use the small business regulation or
- you make use of the special regulation for flat-rate farmers and foresters.
In the case of a new establishment in the years 2021 to 2026, the anticipated tax of 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 is to be converted into an annual tax.
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