The difference between sales tax and sales tax explained in a nutshell

The sales tax is anchored in law

• The commercial sales generated in Germany value added tax are regulated in § 1 UStG (Value Added Tax Act).
• According to this, this tax is subject, among other things, to deliveries of goods and other services that are performed by companies within Germany for a fee.
• The calculation basis is always the sales revenue of the entrepreneur - regardless of whether it is goods or services.
• The tax rates are regulated in § 12 UStG. The standard tax rate is currently 19% of the assessment base - i.e. the sales proceeds. In contrast to this, a lower sales tax rate of 7% applies to certain sales listed in Section 12 (2) UStG. So z. B. Groceries, books or hotel stays are taxed at a reduced rate.
• On the invoice of the entrepreneur to the customer, the sales tax to be paid is added to the sales proceeds of the goods. The two together result in the gross amount of the invoice. If the invoice amount is shown without sales tax, then one speaks of the net amount of the invoice.
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VAT liability and sales tax liability in Germany

In Germany there are the terms sales tax and sales tax. Just one …

• In any case, the customer must pay the contractor the gross amount of the invoice. The entrepreneur then transfers the sales tax received in this way to the Tax office away. Because the person liable to pay the tax and the person who is economically responsible for sales tax are not identical, sales tax is also referred to as indirect tax.

There is a difference to VAT

• The term value added tax is used more often in everyday language than the term value added tax. However, both terms basically refer to the same facts as described in the previous paragraph.
• The difference is hidden in the details, specifically when there are intermediate sellers in the production chain.
• A trader also has to pay sales tax on the goods that he bought from the producer at the purchase price has acquired, whereby the producer as the tax debtor has to pay the received sales tax to the tax office gives away.
• If the dealer now sells the goods to the end customer at a higher price, the end customer must pay the sales tax to the dealer together with the sales price.
• The dealer, in turn, does not pass on the sales tax received in full to the tax office, but offsets the sales tax that he himself paid to the producer. This so-called input tax is deducted from the sales tax liability, so that only the difference has to be paid to the tax office.
• This ensures that everyone involved in the production chain only has to tax the (added) value created by them. The total of the sales tax to be paid by the parties involved always corresponds exactly to the sales tax to be paid by the end customer.
• For the end customer, there is no difference between sales tax and value added tax, as both relate to the total sales revenue of the goods.

Some sales are exempt from sales tax

• The non-taxable sales are also regulated by law. These exceptions are finally listed in Section II of the Sales Tax Act (§ 4 - § 9 USt).
• For example, the purchase stamps are not subject to sales tax. There is also no sales tax obligation for seminars serving professional qualifications.