Value added tax/Turnover tax in Germany

VAT is one of the most important taxes imposed in Germany. All goods and services performed in Germany by a business entity are subject to value-added-tax (VAT). This system is the same in all countries in EU. Tax object is also all public and private consumption – goods and services supplied to the final consumer. The amount of tax payable will correspond to the rate applicable to the goods or services supplied. VAT is payable on:
- supplies and other performances
- imports
- intra-community acquisitions
VAT is an indirect tax, in view of the fact that it is collected from the consumer by way of the entrepreneur. The tax is also collected from someone, who does not bear the entire cost of the tax. 

Taxable period and tax due date
If the tax for the preceding calendar year exceeded 6 136 EUR, the provisional return period is the calendar month. VAT tax reports must be submitted monthly. The advance VAT tax payment must be made by the 10 day after the expiration of the provisional return period. If the tax for the preceding calendar year was less the 512 EUR, the tax office may exempt payments. Entrepreneurs whose turnover (plus the value-added tax on it) has not exceeded 17 500 EUR in the preceding calendar year and is not expected to exceed 50 000 EUR in the current year, do not need to pay VAT tax. The small enterprises are not allowed to deduct the input tax they have been billed.

Tax rate
The minimum standard rate of VAT throughout the EU is 15 %, the maximum rate in the EU is 25 % (the sixth VAT Directive EU). The rate of VAT tax rate generally in Germany is 19 % (from 1.1.2007, in 2006 was the standard rate 16 %). Most goods and services are taxed at the general rate. A reduced tax rate is 7 %. Reduced rate applies mainly to food and agricultural products, books, magazines, newspaper and periodicals and to certain art objects, local transport…

Tax exempt
The turnover tax law provides an extensive list of goods and services exempted from turnover tax. For example, the following are exempted from German VAT:
• export deliveries
• intra-community supply of goods
• the provision of credit
• certain services provided by doctors and other professional medical practitioners
• financial services
• cultural services provided to the public (public theaters, museums, zoos, private schools, orchestras…)
• by certain institutions providing general education or vocational training
• letting real estate in the long-term
• turnover realized by entrepreneurs, who are registered blind persons

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