October 2, 2024

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What Makes the best Taxation Deals When You Are An Entrepreneur

State-enforced services by the entrepreneur can also be taxable. In addition to this main offense, to avoid untaxed final consumption in Germany, there are three secondary offenses to taxable sales: personal consumption, shareholder consumption and the importation of goods into the customs area. An “import sales tax” ensures at the border that non-foreign deliveries and services cannot be used in Germany without tax. 

Non-controllable transactions exist in the following cases:

No exchange of services by non-entrepreneurs (on the service side, the very broad characteristics of an entrepreneur must be met) Internal sales, that is, services between different companies of the same sole trader or within a sales tax group of services outside of the survey area sales from the non-entrepreneurial sphere. The place and time of a delivery are determined by when the power of disposal over the delivery item was obtained or where the item was. There are special regulations for transports and dispatches and other services. For online tax services this is really important.

Tax exemptions with the right to deduct input tax are essentially: 

Export deliveries and contract processing of export items, supply of shipping and aviation, Cross-border transports, brokerage of tax-free sales, tax-free financial transactions in connection with objects that are exported to third countries (not EC). Tax exemptions without input tax deduction exist, for example, for money and capital transactions, transactions subject to traffic tax, insurance sales, sales by building society and insurance agents, leasing of land, sales for medical professionals, sales for the blind, sales from cultural, health, social and educational institutions, delivery or use of objects that serve tax-exempt activities. Tax exemptions with options (the tax exemption can be waived in order to obtain the right to deduct input tax, § 9 UStG): 

  • Certain transactions in money and capital transactions, the real estate and housing industry and the blind. 
  • Tax liability is mandatory for taxable sales that are not tax-exempt. Optionally, tax liability can be brought about by waiving tax exemptions in certain cases, whereby the entitlement to input tax deduction can be achieved.

In addition to wage tax, it is the most profitable tax in Germany. The all-phase gross sales tax was replaced in 1968 by an all-phase net sales tax. This system has meanwhile been agreed in all states of the European Union, which has eliminated the previous disadvantages. The tax burden becomes clear to every citizen. The calculation has become more complicated because, in addition to the sales tax on the sales revenue n, the input tax on all intermediate consumption must be calculated at the same time in order to determine the actual tax on the value added as the balance. 

Unfortunately, so far in Europe there has been no standard

Tax rate can agree. The rates vary between 15 and 25 per cent. The more the tax rates rise, the more unfair the tax becomes because of its regressive effect on different incomes. Sales are to be understood as deliveries and other services that an entrepreneur provides for others or for himself. The first thing to check for every transaction is whether it is taxable or not. In the case of taxable sales, it must also be checked whether it is tax-free (Tax-free sales) or taxable.

A distinction must be made between extraction and use, personal consumption, free donations of objects and other services to employees and other services for purposes outside the company’s. There is no input tax deduction for representation own consumption.