May 29, 2024


Delighting finance buffs

Who is liable for sales tax?

You can calculate the so-called sales tax burden. This is not only interesting for retailers, but also for consumers, as they can calculate the taxes they have paid. In addition, every entrepreneur must regularly use the following invoices, as he must transfer the expected sales tax to the tax office in advance (target taxation).

What is the VAT burden?

This is the difference between the sales tax incurred and the input tax to be deducted. This sum must be transferred to the tax office.

How is sales tax calculated?

In order to correctly indicate the sales tax in the invoice, it must be calculated in advance. If you know the gross and net amount, the calculation is very easy:

  • VAT amount = gross amount – net amount

If you don’t have the net amount to hand, but you know the gross amount, the following formula will help. The VAT rate is usually 19{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58} , with basic foodstuffs it is occasionally 7{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58}.

  • Net amount = gross amount ÷ (1 + VAT rate)

Both retailers and consumers should always have the gross amount to hand, because that is the amount that ultimately always has to be paid.

To make this clearer, let’s calculate the sales tax using the example that we already used: The carpenter sold his table to a consumer for 178.50 euros. To get the net amount, proceed as follows:

  • Net amount = 178.50 euros ÷ (1 + 19{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58})
  • Net amount = 178.50 euros ÷ (1 + 0.19)
  • Net amount = 150 euros
  • VAT amount = 178.50 euros – 150 euros
  • VAT amount = 28.50 euros

The conversion factor of 1.19 (1 + 0.19) is to be used if the value added tax is 19{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58}. However, if the dealer or the customer pays a tax of 7{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58} , the factor is 1.07 (1+ 0.07). However, if you want to know what the gross amount looks like, i.e. including sales tax, the following formula should be used:

  • Gross amount = net amount x (1 + VAT rate)
  • gross amount = 150 euros x (1 + 19{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58}) [or 7{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58}]
  • gross amount = 150 euros x 1.19 [or 1.07{b1ee4ac4d8d7b8e1af61a560a11ca52574b8103b547ccac8037ce0cdf9e7ba58}]
  • gross amount = 178.50 euros

Sales tax advance notification

As already mentioned, the entrepreneurs have to make a VAT return. According to 18 UStG, they must report the incurred sales tax to the tax office on a monthly or quarterly basis and then pay it. In case of online tax filing this is important.

Sales tax: International regulations must also be observed

The submission period for the pre-registration of the current year results from the sales tax burden of the previous year. However, the law provides relief, especially for small companies with a low sales tax burden.