For the payment of value added tax there is the actual procedure (german Ist-Verfahren) and the target procedure (german Soll-Verfahren). During the actual procedure, value added tax and input tax are paid according to the receipt date. During payment, the value added tax is first paid when the customer has paid their bill. Generally speaking, the target procedure is applied. It is only possible to use the actual procedure upon request to the tax office.
As a rule, the value added tax (VAT) prepayment registration timeframe is one month. The value added tax prepayment registration must be submitted to the tax office on the 10th day after the prepayment period expires. Upon request to the tax office, it is possible to obtain a quarterly or yearly prepayment period.
A VAT prepayment registration is used to transfer the VAT already incurred by a company to the tax office. The pre-booking must be submitted to the tax office on the 10th day after the preregistration period expires. Upon request, a permanent time extension of a month at a time can be made, meaning a pre-booking for January must first be submitted to the tax office on the 10th of March.
The VAT prepayment registration can be submitted to the tax office by your company or optionally also by your tax advisor. Unfortunately SMACC cannot do this on your behalf.
The small business regulation (§19 VAT Act) simplifies the VAT law for businesses with a low turnover. Small businesses are by enlarge entitled to choose to be treated as non-entrepreneur (no VAT charges or input tax deduction). This is possible if a company’s definitive turnover (plus payable taxes) has not exceeded 17500 € in the preceding calendar year and if it is not expected to exceed 50000 € in the current calendar year. If in doubt, ask your tax advisor if this applies to your company.
A company can only provide services or/and deliveries in accordance with VAT law.
A service (german Dienstleistung) is an effort performed by a natural or legal individual (e.g. businesses) to fulfill a need which does not directly serve goods manufacturing. Generally speaking in the case of services there is concurrence of labor and consumption e.g. a trip to the hairdressers. The company accomplishing such a service is called a service provider.
A delivery is a service performed by a natural or legal individual (e.g. businesses) to procure the so-called authority to dispose over an item. In VAT law (§3 article 1), entrepreneur deliveries are defined as “[…] services through which he or a third party working on his behalf empowers the buyer or a third party on his behalf to order an item in his own name (control of assets).”
According to §12 section 2 of VAT legislation, certain services are taxed at a reduced tax rate of 7 %. The services to which this applies are named in VAT legislation.
Paragraph 4 of VAT legislation names services that are exempt from VAT. This includes, for example, interest income. According to §13 of VAT legislation, this does not include IG delivery or services.
The term EU countries stands for all countries – besides Germany – who belong to the European Union (EU). Currently the EU has 28 member states. This includes e.g. France, the Netherlands, Belgium, Poland and Austria. Your company provides services in a third country if this country does not belong to the European Union (EU).
Services are efforts performed by a natural or legal individual (e.g. businesses) to fulfil a need. If the provision of services is carried out electronically, it is considered to be an electronic service, e.g. Software as a service (SAAS).
Differential taxation exists, for example, in the automotive industry. If you are in doubt whether differential taxation is applied to your business, please clarify this with your tax advisor.