Sales tax in Germany: Easy Solutions

In Germany, sales tax or value added tax has to be added to almost all…

In Germany, sales tax or value added tax has to be added to almost all products and services. With over 30 percent of government revenue, sales tax is one of the most important budget items in Germany.

Intra-Community deliveries to other EU countries, deliveries to non-EU countries, insurance, loans or postage stamps are exempt from tax. Those who fall under the small business regulation are not allowed to show sales tax on their invoices. However, he is also not reimbursed for the input tax amounts paid to his suppliers.

The standard tax rate for sales tax in Germany is 19 percent. The reduced tax rate is 7 percent. It applies, for example, to tickets for public transport, theaters, concerts and museums as well as newspapers, magazines, books, groceries, dairy products plus hotel accommodation and campsites. This leads to the often confusing fact that two types of tax are shown on hotel bills: 7 percent on overnight stays and 19 percent on breakfast. Tax exemptions apply to agricultural products with 10.7 percent and forest products with 5.5 percent VAT. The sales tax calculator  is important in this case.

Sales tax in Austria

In Austria, all companies are subject to sales tax and are entitled to deduct input tax if their annual turnover exceeds 30,000 euros. Companies with lower annual sales have the option of taking advantage of the small business regulation. You can choose whether you bill with or without sales tax and input tax.

Doctors, banks, insurance companies and non-profit associations that do not make any profits are also exempt from VAT and input tax deduction.

The standard tax rate in Austria is 20 percent and the reduced tax rate is 10 percent . Pharmaceuticals, food, books, newspapers, rentals, agricultural products and passenger transport are taxed at 10 percent. A special reduced tax rate of 13 percent applies to cultural events, wood, animals, plants and seeds.

Exceptions apply in the communities

As exclaves or Alpine valley locations that can only be reached from Germany in terms of transport, they are part of the German customs area. The German sales taxes of 19 and 7 percent respectively have to be paid here.

Sales tax in Switzerland (Swiss sales tax)

In Switzerland, the surcharge is not referred to as sales tax, but purely as sales tax, abbreviated in capital letters VAT. The tax is levied by the federal government and, as in Germany and Austria, can be offset against input tax.

Since January 1, 2018, the standard rate has been 7.7 percent. A reduced rate of 2.5 percent applies to everyday goods such as groceries. Hotel overnight stays are taxed at 3.7 percent.

Conclusion

The comparatively low tax rates can be explained by the Swiss income tax system. In addition to the federal government, the cantons and municipalities also levy their own income taxes, while in Germany and Austria the (higher) taxes collected by the federal government are distributed among the states.