25th June 2020
The reduction of the German value added tax (sales tax) from 19% to 16% and from 7% to 5% sounds simple - but it is not. The VAT conversion means considerable extra work for both you and us! This paper provides you with important information and explanations. Unfortunately, some aspects are still unclear or have been eased in the discussion, so that we can only give you the current status here.
Reduction of VAT from 1 July
The reduction in value added tax (VAT) from 19% to 16% and 7% to 5% respectively will come into force from 1 July 2020. The reduced VAT rates currently apply until 31 December 2020.
It is demanded that there should be facilitations or a non-compliant regulation for the B2B sector. The aim would be to allow full deduction of input tax by the recipient in the case of invoices issued incorrectly with excessive VAT due to the change in tax rates. Whether or not such relief will be achieved has not yet been decided (17 June 2020).
Execution of the sales decisive
The reduced rates of VAT apply to all transactions carried out from 1 July 2020. It is not important when the payment for these sales is received. The only decisive factor is the time of performance.
Our experienced indirect tax experts provide a centre of excellence in the field of VAT & Customs across the world. Besides compliance questions, these experts can answer any day-to-day questions as well as assist you, among others, with the correct qualification of transactions, evaluations of contracts, VAT audits and setting up processes together with creating manuals and guidelines.
Wherever your clients are doing business, let our Global VAT Specialists be your outsourced indirect tax team.
To learn more about the activities of the Global VAT Specialist Group, or any of the other Groups, please contact International Business Development Manager, Nicki Lynn firstname.lastname@example.org
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