After the end of the calendar year, the entrepreneur must submit a tax return in which he must also calculate the tax himself. The tax return is equivalent to a tax assessment subject to verification. The tax office only sets the tax in a tax assessment if it deviates from the tax calculated in the tax return.
The Domestic Rules for Taxation
For the taxation of domestic sales of companies from other EU countries and neighboring countries, certain tax offices have been declared locally responsible by ordinance of February 21, 1995 with the following changes. If there are any doubts about the responsible tax office, the Federal Office of Finance in D-53225 Bonn, provides information. The sales tax law contains an extensive catalog of services that are exempt from sales tax. One group includes sales for which the input tax deduction is retained. These include, in particular, export deliveries and intra-Community deliveries, certain sales for shipping and aviation, as well as a number of other services related to objects of import, export and transit.
- For the other group of exemptions, input tax deduction is excluded. These include in particular the granting of loans, the leasing of land, certain services provided by doctors and other health professions, the services provided by statutory social insurance, the services provided by most hospitals and old people’s homes, the sales of blind entrepreneurs, the services provided by associations of voluntary welfare, the services provided by private schools, theaters, orchestras, museums, zoos and the services of institutions promoting young people.
- Entrepreneurs who are based in Germany, in a free port or in certain parts of the territorial sea and whose turnover (plus the applicable sales tax) did not exceed € 16,620 in the previous calendar year and is expected to be 50 in the current calendar year. It will not exceed € 000 (small business owners) do not need to pay sales tax. To reduce the complications, hiring the online tax services is a very good option.
For the Small Businesses
However, these small businesses are denied the right to deduct the input tax invoiced. They are also not allowed to issue invoices with an open tax ID. Because of the refusal to deduct input tax, the special regulation may have an unfavorable effect on small businesses. The law therefore gives them the option of waiving the special regulation and choosing taxation according to the general rules. You are then bound to the waiver for 5 years.
Sales By the Entrepreneurs
Entrepreneurs who had sales (plus the applicable sales tax) of more than € 16,620 in the previous year must always tax their sales in accordance with general regulations. You are therefore entitled to deduct input tax and must also openly show the sales tax on your invoices. This also applies to entrepreneurs which did not exceed the sales limit of € 16,620 in the previous year, but are expected to have sales (plus the applicable sales tax) of more than € 50,000 in the current calendar year. If entrepreneurs’ resident abroad cause taxable deliveries of works or other taxable services, the recipient of the service is liable for sales tax if the recipient of the service is an entrepreneur or legal entity under public law.
This also applies to taxable deliveries of objects assigned by way of security by the security seller to the security buyer outside of the insolvency proceedings and of property in foreclosure proceedings by the enforcement debtor to the buyer.