With a sales tax return, a company reports its sales tax to the tax office for the relevant period, i.e. for the past calendar year. Today this can only be done electronically via the Elster portal or a corresponding software; the authorities only accept paper forms in very few exceptional cases. An annual sales tax declaration is always required, even if monthly or quarterly advance registrations have already been made.
Who has to submit a VAT return?
Every entrepreneur who provides services or sells products in Germany for a fee is liable to sales tax . You can find the legal regulations for this in the VAT Act . According to Deluxesurveillance, the obligation to levy sales tax does not depend on the industry or the size of the company. Only a few facts are excluded. The sale of land or shares in companies is usually tax-free.
If you register a business , you will receive a sales tax number from the tax office , which you have to use for your sales tax returns . Even as a freelancer, i.e. as a coach, trainer, lawyer or artist, you have to levy sales tax on your services. There are only exceptions for small businesses. At the beginning of your work you have to submit a monthly VAT return. For small companies, you can also apply for a quarterly fee . So you are regularly forced to pay your sales tax also to be paid, i.e. to pay the tax. This is an advance payment to the tax office. As part of your annual tax return, there is then an annual return for sales tax, which is made for the previous calendar year. Here you list all sales and the resulting tax again, including the input tax amounts that you can offset.
VAT return deadline
The law on the modernization of the taxation procedure extended the deadlines for the annual sales tax return. By 2017 you had to submit the declaration on May 31 of the following year; from the 2018 assessment year, as a taxpayer, you have until July 31 as a taxpayer according to § 149 AO . If you delegate this task to your tax advisor, the deadline will be extended to July 31 of the following year.
You are an entrepreneur and want to submit your sales tax return. If you want to create this for the 2019 calendar year , you must submit the VAT return to the tax office by July 31, 2020 at the latest . You must adhere to this deadline unless you have applied for an extension of the deadline and this has been approved or you have engaged your tax advisor. If you have commissioned your tax advisor to prepare the sales tax, they must submit your sales tax return by July 31, 2021.
If you let these deadlines pass, there is a risk of a late penalty . This can amount to up to 10 percent of the tax, but no more than 25,000 euros. You must pay the tax itself within 30 days of submitting the return .
If you pay too late, the tax office will charge a late payment penalty . Incidentally, this also applies to the tax liability from the advance notifications of sales tax, which you have to pay in the course of the year. That can be expensive because the tax office calculates 1 percent of the tax liability for every month or part thereof.
The sales tax liability is € 1,000.00, your tax advisor sent the annual sales tax return on September 20th of the following year. However, your payment will not be received in the authorities’ bank account until December 15th. Since it was already due in October, the tax office now calculates:
|Late payment surcharge for October (1 percent of € 1,000)||€ 10.00|
|Surcharge for November||€ 10.00|
|Late payment surcharge for December||€ 10.00|
|a total of:||= € 30.00|
Instructions for the VAT return
There is a form from your responsible tax office for both the annual sales tax return and the regular advance registrations . However, since 2011 you can only create your declarations electronically , i.e. online. Although you can submit an application to the tax office to waive the electronic submission, the chance is rather slim, as the application will only be approved in extreme cases.
In recent years, the German tax authorities have developed the ELSTER process for electronic submission , a method to enable you to submit your tax returns online. Since August 2013 you need to authenticate an electronic certificate , which you on www.elsteronline.de get.
ELSTER sales tax return
The declaration for the annual sales tax consists of 6 pages, there is also an online help for filling out the form . The Federal Ministry of Finance publishes a sample of the VAT returns for download. Make sure to select the form for the correct year here.
As a taxpayer, you actually have to sign the declaration yourself. Since this is of course not possible with electronic mailing, electronic authentication is necessary in advance . This means that you have to apply for a security certificate. For this one is registration in the Elster portal required. You will then receive a password by post. Please note that this process can take a few days, so don’t start too late with your first tax return. Alternatively, ELSTER signature cards or security sticks can also be used. Without this authentication, only the income tax returns can be made and be sent. If you use accounting software, you do not have to apply for the security certificate, as this is integrated in the software.
Fill out the VAT return form
All the data you need to fill out can be found in your bookkeeping. You have to enter these facts:
- general information such as the name of the company and its registered office
- all taxable sales that have been made within the period (net value), plus the resulting tax amount
- tax-free sales
- intra-community acquisitions and triangular transactions
- deductible input tax amounts
- the calculation of the tax liability or the reimbursement claim
Typical errors in the VAT return
You always have to submit the annual sales tax return for the past calendar year, even if the company has a different fiscal year . You have to take into account all sales, including those that you have already taken into account in the advance VAT return. The net amounts of the services to the customers are always taxable . Goods given free of charge or personal consumption in the catering industry also count towards sales.
In the tax calculation on page 6 of the declaration, you then transfer all the numbers from the specified lines on the previous pages into the corresponding fields. If more input tax than sales tax is claimed, this amount must be given a minus. It then identifies a taxpayer’s right to reimbursement.
The tax authorities then usually no longer issue a tax assessment for sales tax. The tax office only takes action here if the calculation was incorrect. If you calculate a tax liability, you have to pay it immediately. You must not wait for a request from the office.
Small business owner sales tax return
In terms of sales tax, you are considered a small business owner if you do not generate more than € 22,000 in sales in the year and are likely to remain below the sales limit of € 50,000 in the next year. You still have to submit an annual sales tax return for small businesses . For small businesses, however, only paragraph B of the declaration is important, because in lines 31 to 35 you enter the amount of sales for the past year as well as an estimate for the following year. Add up all the payments you have received from customers, there is no distinction between net and gross with small business owners!
Sales tax exemption for small business owners
According to the small business regulation, you are exempt from sales tax as a small business owner. You do not need to pay any tax to the tax office on the payments you receive from customers. This has many advantages, because you save a lot of time on tax calculations. Bookkeeping is also easier. However, you are not allowed to show sales tax on your invoices . It is enough if you point out: “As a small business owner according to §19 Abs.1 UStG I do not show sales tax”. The disadvantage: You cannot claim input tax either .
Are freelancers exempt from sales tax?
Since freelancers also provide their services or products for a fee, they are usually subject to sales tax . However, § 4 UStG defines some facts that are also tax-free for freelancers . Here are some examples:
- the activity as an insurance broker, insurance and building society representative
- the rental and leasing of land and buildings
- Medical treatments in human medicine
- Teaching services by independent teachers in schools
The freelancer does not have to submit a separate application for VAT exemption . If he performs non-taxable services, he does not have to charge sales tax. If he wants to make use of the small business regulation, he must state this in the tax registration of his sole proprietorship . The tax office provides the tax registration questionnaire for this purpose , where the cross is required on page 6 under point 7.
Danger! Tax audit small business owner
By specifying the amount of sales in the annual sales tax return, the tax authorities check whether the application of the small business regulation is still legal. The sales of the previous year may not exceed € 22,000 and in the current year may not exceed a limit of € 50,000. Exact tax audits are also possible for small businesses, and in the event of suspected tax evasion, their bookkeeping is also put through its paces. Even if small business owners are allowed to run a simple income-surplus-calculation , they are obliged to record the turnover without gaps and to archive receipts in accordance with the statutory retention periods .
The advance VAT return is due monthly or quarterly. After you have sent this to the tax office, however, there may still be changes in your bookkeeping . This can be an invoice change or cancellation, or you may find an invoice that you have not yet considered. Therefore, you have to submit the sales tax return in order to guarantee a correction for possible changes .