The invoice has a central position in sales tax law. It is vital to the net all-phase sales tax system because it secures the entrepreneur the input tax deduction for his input sales according to § 15 Abs. 1 UStG.

Strict standards for proper billing

The principle is that for the input tax deduction according to § 15 Abs. 1 UStG a proper invoice according to § 14 UStG is required. The legislature has repeatedly tightened the requirements for a proper invoice in recent years. An invoice must contain a large number of information, which can be found in the catalog of § 14 Paragraph 4 UStG. If even one of these details is missing, the input tax deduction is to be denied, as there is no proper invoice.

The new tax rates apply to goods and services exported from July. In the best case, this could reduce the final price. With a purchase worth 300 euros, for example, customers could save 8 euros or 6 euros – depending on whether the VAT rate for the goods is 16 percent or 5 percent.

  • Tax with the characteristics of consumption and transfer tax (marketing, tax aspects). On the one hand, the aim is to tax every domestic (final) consumption, on the other hand, it is linked to economic traffic (exchange) processes. Since 1968, the system of “value added tax”, an “all-phase net sales tax with input tax deduction”, has been used in the Federal Republic of Germany to ensure that sales taxation is neutral in terms of competition. For online tax filing this is important.

For the Net Income

The entrepreneur’s net income (price without VAT) is taxed at every economic level, whereby the sales tax invoiced to him by the preliminary stage (supplier) can be deducted as “input taxes”. As a result, level by level tax is only levied on the “added value”, the “added value” of the level. If the recipient of the service is not an entrepreneur, but the end consumer, he is not entitled to any input tax deduction. 

For the Employers

He bears as intended by the system all of the VAT passed on to him in the gross price to be paid, without being entitled to any deduction (final debit). The actual payment of the total burden to the tax authorities is effected by the entrepreneurs of the economic levels who were involved in the delivery / other service overall. The economic importance is often underestimated, since it is simply viewed as a “transitory item”. 

The Overlooked Fact

What is overlooked is the fact that the effective VAT burden (payment burden and tax administration costs) can be influenced by circumstances, option rights, simplification regulations and administrative measures. The main offense of VAT concerns: deliveries and other services, which an entrepreneur in the survey area carries out for a fee as part of his company.