Value added tax

In economic terms, VAT is to be classified as a consumption tax. It is designed to be borne economically by the consumer (end user). However, the obligation to calculate and pay VAT to the tax office is not the responsibility of the individual consumer, but of the business. On the other hand, entrepreneurs have the option of reclaiming the VAT invoiced to them by other entrepreneurs as input tax from the tax office when they purchase services for their company, so that the entrepreneurs are not economically burdened with VAT. This option to deduct input tax depends on the type of economic activity.

The turnover is taxed unless a tax exemption applies. Turnover includes

• Deliveries (e.g. sales of goods) and
• other services (e.g. consultancy services, repair work, letting and leasing),
• intra-Community acquisitions (e.g. purchases of goods from other EU member states),
• free transfers of value.
• the importation of goods (handling of taxation by customs)

Tax exemptions are only possible under certain strict conditions, in some cases separate certificates are required.

The general VAT rate (= standard tax rate) is 19% and the reduced tax rate is 7%. VAT is calculated by applying the respective tax rate to the so-called assessment basis.

In principle, the entrepreneur is liable for VAT. However, VAT is only charged if the entrepreneur is not a so-called small business.