Sales Taxation

Sales Taxation


VAT has to be paid quarterly in advance. Within 10 days after the end of a quarter the VAT tax return has to be calculated and handed over electronically to the local tax office. Enterprises whose VAT liability exceeded 7500 € during the preceding year have to file the tax return every month instead. Within another ten days the VAT has to be paid. An additional VAT tax return is due at the end of each year.

In principle, the provider of goods or services is liable for the payment of sales taxes. However, special regulations apply to B2B-contracts with foreign service providers that are not permanently established in Germany. In this case, VAT needs to be paid through a reverse charge procedure, i.e., the German service recipient is the tax debtor.

Within the Single European Market sales to Germany can be exempted from value added tax (VAT) in the country of origin. Suppliers from EU member states are able to declare sales to Germany in the recapitulative statement (''zusammenfassende Meldung'') and acquit themselves of the VAT. The recapitulative statement form is supposed to be provided by the national tax authorities. In this form, vendors have to identify customers by quoting their VAT registration number, which should be exchanged upon conclusion of the transaction.

In order to quantify the trade volume within the Single European Market, European statistics offices have established the Intrastat system. Every vendor or buyer who realizes an annual trade volume of more than 400,000 Euro must report the turnover to the corresponding office for national statistics in his/her home country. Such data is used to calculate GDP- and foreign trade figures. For more information, please contact the relevant authorities in your country.

Since VAT is a very complex subject and there are many different cases and exceptions, it is recommended that all trading companies seek competent advice in this area, to make sure that they are fully informed about the taxes that apply to their products. A suitable tax advisor might be found through the search engine of the German Association of Tax Advisors.


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