VAT liability and sales tax liability in Germany

A look at the law also helps in this case. There is only the sales tax law, no sales tax law. The discussion should be based on that alone.

The sales tax law knows no sales tax liability

• The sales tax law does not actually see a conflict in the different terms of sales tax and sales tax. It is true that it mostly only speaks of the "tax" itself. But what is meant is always sales tax. There is no question of VAT.
• It says in § 12 I UStG that the tax for every taxable turnover is 19 percent. Also, § 19 IV UStG only stipulates, as a mandatory entry of an invoice, that the fee broken down according to tax rates and the applicable tax rate are to be stated in the invoice.

Entrepreneurs and consumers have different points of view

• The terms can be understood from the perspective of the entrepreneur and the consumer. From the point of view of the entrepreneur, sales tax arises when he renders deliveries or other services. From the consumer's point of view, however, it is not a question of sales when he buys goods or uses a service of the entrepreneur. From his point of view, he pays a tax on the actual value of the goods or the value of the service, with which the "added value" of the service is compensated. In this respect, the consumer is liable for VAT.
• Entrepreneurs are therefore subject to sales tax. You have to increase the price of your product, goods or service with sales tax and invoice this sales tax to the customer. The customer pays this sales tax, which the entrepreneur minus the input tax to the Tax office must discharge. The "added value" generated in the company is therefore taxed.


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

VAT is a tax that every consumer faces on a daily basis ...

• Before the entrepreneur forwards the collected sales tax to the tax office, he may deduct the sales tax that he himself paid to other entrepreneurs. This sales tax is treated as input tax. For this purpose, the entrepreneur prepares a sales tax return and an annual sales tax return. Small businesses are exempt from VAT.
• For entrepreneurs, it means that sales tax is made up of two elements. On the one hand, it concerns the sales tax received and, on the other hand, the input tax paid by himself. From the consumer's point of view, the tax consists only of the VAT that he has to pay. The consumer cannot claim input tax himself.
• From the point of view of the entrepreneur, the service is therefore subject to VAT, from the point of view of the consumer it is ultimately subject to VAT. The result is always the same.

Abroad often adopts the language rules in Germany

• In Germany, the term value added tax is predominantly used in advertising. The customer pays the goods plus the "statutory value added tax", even if the law speaks a different language.
• The term value added tax used in Germany is also used abroad to denote the actual value added tax. The tax is called "Value added tax" (VAT) in England and "Taxe sur la valeur ajoutée" (TVA) in France.

It does not matter whether the term is used in an invoice value added tax or VAT is used. The tax authorities do not use the designations as an opportunity not to recognize an invoice as a business expense. As an invoice issuer, however, you should use the legal term sales tax.