Turnover tax made easy? Only with the necessary advice and specialization!
We encounter value added tax or turnover tax every day, as it is shown on almost every invoice. The apparently simple system of VAT identification and input tax deduction ties up more resources in companies and in advice. In the last few years, sales tax has become a very separate area of tax law, which in many areas can only be fully monitored through specialization. The influence and constant adjustments have long since ceased to come only from national legislators. The European VAT system directive and the European Court of Justice (ECJ) make decisive contributions, as VAT is the only tax area in which European harmonization is already well advanced. Anyone who does not have an eye on the current developments and jurisprudence of the ECJ on sales tax will quickly lose track of them.
Our consulting approach
Our turnover tax consulting focuses on the client and their economic activity. We examine and check the existing delivery and service relationships, take care of the proper implementation and optimization of your activities and compliance with the necessary formalities. We always see our sales tax consultancy as an interface to our other specializations. Anyone who operates internationally and builds structures abroad will, in addition to questions of international tax law, always trigger changes in sales tax through cross-border delivery structures. And if you want to digitize your accounting, you also digitize your sales tax issues to a certain extent. We prefer to advise these topics holistically - from A to Z.
From the range of services in our specialty area of turnover tax:
The sales tax should remain neutral for the entrepreneur, i.e., should not burden him. The sales tax shown in the invoices must be discharged by the entrepreneur and sales tax that has been invoiced can be claimed as input tax and settled with sales tax. Is it actually very easy and is transacted in the accounts department? It seemed to work like that for a long time. Due to the increasing complexity of sales tax, this is no longer so easy in today's reality and in many cases no longer a case of accounts department. This applies at the latest when there are service relationships with foreign countries and the European mechanisms apply for intra-community deliveries and intra-community acquisitions, shifting the VAT liability (Reverse Charge Procedure) and export and import cases with reference to third countries, i.e., countries outside the European Union.
Moreover, sales tax is regulated in a very formalized manner. In many places, input tax deduction and tax exemptions are made dependent on compliance with formalities, such as proper invoicing and accounting and documentary evidence for cross-border deliveries. If these are not fulfilled, the neutrality of sales tax can quickly topple and become an expensive source of error in a company. Sales tax facts are specifically examined in field audits, sales tax – special audits or sales tax checks and evaluated with the aid of appropriate testing software. Non-compliance with formalities can quickly turn into a high risk for companies and additional penalties may not be underestimated.
In addition, VAT is regulated in a very formalised way. In many places, input tax deduction and tax exemptions are made dependent on compliance with formalities, such as proper invoicing and bookkeeping and supporting documents for cross-border deliveries. If these are not fulfilled, the neutrality of VAT can quickly be overturned and become an expensive source of errors in a company. VAT issues are specifically scrutinised in external audits, special VAT audits or VAT inspections and evaluated with the help of appropriate audit software. Thus, non-compliance with formalities can quickly become a high risk for companies and additional sanctions should not be underestimated.
Nowadays, supply structures and service relationships are rarely restricted to the domestic market. In the movement of goods or the delivery of services, due to the free movement of services and the merging of economic areas, nowadays it is normal that customers or suppliers come from different countries and the catchment area of a company does not end at the German border. Cross-border activities by companies and freelancers can very quickly lead to sales taxation and additional reporting requirements in different countries. No problem, we will advise you!
- Advice on the delivery of goods abroad or on the delivery or purchase of goods from or in other countries, intra-community deliveries, intra-community acquisitions and shipment, chain transactions, triangular transactions and consignment warehouses abroad
- Advice on and preparation of delivery contracts as well as conditions for sales tax implementation, in particular when using Incoterms and individual delivery conditions (identification of the moving delivery)
- Verification of compliance with sales tax accounting records and receipts, such as CMR bills of lading or entry certificates, sales tax identification numbers
- Sales tax advice when importing goods for free movement within the EU, in Germany or importing outside of Germany and for export deliveries
- VAT advice on cross-border services, e.g., in case of events abroad, trade fairs, training courses and conventions
- Assistance in recapitulative statements and Intrastat declarations
- Advice and implementation of the MOSS process (mini one-stop shop)
Attention should be paid to programmes for invoicing, merchandise management as well as payment services.
From our point of view, mail order business has become a separate field of VAT advice, in particular through the inevitable use of Amazon, Ebay and others or our own online platforms. This area is characterized by its own rules and the challenge to organize and evaluate a large number of transactions as promptly, automatically and digitally as possible, while still correctly illustrating the sales tax. Manual activities are obsolete here. It is rather a question of understanding and using the systems and software solutions that are already available and that are constantly being added. Attention should be paid to invoicing programs, enterprise resource planning and payment services
- Advice on sales tax for setting up and monitoring mail order activities
- Advice and establishment of all necessary precautions when participating in the Amazon CEE or PAN-EU program
- Checking and monitoring the relevant turnover thresholds of all countries concerned
- Coupling of inventory management software, online shop analyses and payment service providers with your financial accounting, e.g. Plentymarkets, JTL, Taxdoo, Paypal
- Assistance with regard to the registration and processing of sales tax obligations abroad
Companies that have more than one domestic and foreign firms or have established permanent establishments must also be fit in the field of sales tax and encounter the fiscal authorities on equal footing. Even better, they are one step ahead of you and are skilled at settling potential risks. The exchange of services between affiliated companies, holdings or the shareholders are subject to their own VAT rules. Here it is important to determine who is to be regarded as a separate entrepreneur within the meaning of the VAT Act or whether company investments are part of a sales tax group. This arises with sometimes far-reaching consequences if the prerequisites (financial, economic and organizational integration into the company of the parent company) actually exist and not, for example, through a right of choice for the companies concerned.
In the case of company acquisitions, the sales tax treatment and the illustration through corresponding tax clauses in the contracts is of decisive importance. Here - depending on the type of company acquisition (share deal or asset deal) - the question of sales tax treatment must be answered and the contractual clauses must be accordingly shaped.
The specific features of VAT and rules of the game also apply to the exchange of services between a company and its shareholder, which should be checked and observed accordingly.
- Advice and examination of entrepreneurial capacity within national corporate groups and inter-relations, keyword sales tax entity
- Sales tax treatment of company acquisitions and tax clauses, in particular for tax-free business disposal as a whole and real estate transactions
- Advice on the VAT treatment of the exchange of services with shareholders and affiliated companies with a foreign connection or tax-neutral internal sales
- Support in transactions and due diligence checks
- Sales tax review of the existing supply and performance relationships
From a sales tax point of view, certain industries have their own specific features with their own rules. These must be known in advance and must be optimized in their application. Through our many years of experience in various industries and our constant exchange with domestic and foreign colleagues, we have accumulated an extensive knowledge. And yet, here too, it is important not to lose respect for complexity and to remain vigilant. Because what was right and logical yesterday may look different tomorrow.
- VAT exemptions for certain occupational groups (especially education, health and finance)
- Examination of the applicable (reduced) tax rate taking into account the customs tariff groups for goods deliveries
- Sales tax advice on construction work within and outside the country (property developers, general contractors and subcontractors)
- Sales tax advice and contractual clauses for property purchases and real estate transactions
- Advice in connection with travel services
- Special topics in car dealerships, such as differential taxation, exchange sales, financing and payments
- Transport services at within and outside the country as well as related areas such as loading and unloading, customs clearance, etc.
With regard to sales tax, we prefer to be there by your side from the beginning, so that business transactions can be specifically analyzed and implemented in accordance with the law. Sometimes, however, sales tax problems only come up in a statutory audit. In this case, damage limitation through defense advice is often required. If you are not our client, but need our support in such a case, we are of course happy to be there for you!
- Assumption of or assistance in audits, sales tax – special audits and sales tax checks
- Assumption of sales tax legal remedies or proceedings in Finance Court.
- Examination of possibilities of damage limitation (invoice corrections and additional proof of documents)
Often, foreign companies are often only liable for sales tax in Germany without being registered for income tax purposes. A tax office is competent, depending on the origin of the foreign entrepreneur. If the transport of a delivery of goods begins in Germany, this usually leads to an obligation to register for sales tax purposes in Germany. But other situations and accompanying circumstances of economic activities can cause companies to register for VAT purposes in Germany. We are happy to help with all these subjects - you are warmly welcome!
- Advice on sales tax issues relating to German sales tax law
- Sales tax declaration in Germany for foreign companies
- Input tax refund applications for companies from third countries
- VAT on e-Services for foreign companies from third countries with online or otherwise electronically provided services to European consumers (B2C)
We would also be happy to come to you and proactively advise you on the existing structures or raise awareness in your employees with regard to accounting, purchasing and sales through training on specific and current sales tax issues, tailor-made for your company.
- We would also be happy to come to you and proactively advise you on the existing structures or sensitize your employees in accounting, purchasing and sales through training on specific and current VAT issues, tailor-made for your company.
- Conducting training on general, current or industry-specific topics
- VAT checks to identify risks, e.g., with regard to compliance processes and invoice format
- Preliminary examination within the framework of announced field audits, e.g. the existing book and documentary evidence, sales tax validation and input tax claim