What are taxable transactions?
According to whicheverhealth.com, the term “tax-exempt” or “tax-free” is always used when a transaction is simply not taxed because current legislation states that no tax is payable. It is also important to make a distinction between a real and a fake sales tax exemption . With regard to the real VAT exemption, the buyer can deduct the input tax even though the turnover is actually tax-exempt . Classic examples are:
- Export deliveries
- Certain services that were commissioned by foreign customers
- Intra-Community supplies
A “fake tax exemption” is used when input tax cannot be claimed in connection with tax-exempt sales.
Examples here are sales:
- in connection with credit institutions and building societies
- from land
- of securities
to be named.
Regardless of why a sales tax is exempt, it is always important to point out on the invoice in question why the sales tax item is missing. Further examples of tax-free benefits in the overview. On closer inspection, it becomes apparent that the list of tax-free benefits is usually longer than originally assumed.
This also includes:
- Sales in shipping or aviation
- Services provided by the railways and the federal government (e.g. various therapeutic treatments or services in the field of care)
- Insurance business
- Lending and brokerage
- Rental and leasing
- Sales in the healthcare sector (including from doctors, hospitals, physiotherapy, etc.)
- various services in the field of school and adult education (e.g. relevant courses, etc.).
Definition – taxable sales
In order to distinguish taxable sales from other types of sales, it helps to keep a specific scheme in mind. According to the corresponding rule, the respective classification can be made quickly.
According to the law, sales are taxable if:
- it is a delivery or a service
- the delivery or service in question is carried out by an entrepreneur
- the delivery / service is carried out in Germany
- a fee has been agreed
- the delivery / service is related to the company of the person carrying out the work.
For a final classification, it is important that all points really have to apply. Only then does the sales tax apply.
Transfer of tax liability
The transfer of tax liability is known, among other things, as the reverse charge procedure. Put simply, this is a reversal of the tax liability or the deduction procedure. The special feature: if the transfer of tax liability takes effect, the customer has to pay the sales tax and not the executing company. However, of course, only the net amount is billed. The customer, however, is obliged to pay the sales tax to his tax office. Furthermore, if he is entitled to input tax, he can also claim the amount again.
One of the particular advantages of transferring tax liability is the fact that foreign customers do not have to transfer money to the German tax office. He regulates both sales tax and input tax with the relevant authorities in his country. With the help of this procedure, fraud can also be prevented, among other things.
Intra-community acquisitions can exist on the basis of two different scenarios. For example, the relevant regulations apply if:
- Goods are delivered from one EU country to another EU country
- an EU country delivers to a duty-free area
A list of duty-free areas can be found in Section 1, Paragraph 3 of the Sales Tax Act. In order to be able to make an exact classification, it is important to know who the service recipient is, what service it is and where the service is provided. Basically, for example, it must be an entrepreneur who acquires the object in the course of intra-community acquisition for his own company or is a legal person and not an entrepreneur or the object in question is not acquired for the company. The question of the type of object is also interesting here.
In connection with the purchase of vehicles, for example, every buyer (including private individuals) must pay tax on the item. The “opposite side” to the buyer is of course also important. In the present case, the car in question has to be sold by a company. This must not fall into the ranks of small business owners. Otherwise he would be exempt from sales tax.
However, some types of intra-community acquisition do not have to be taxed. This applies, for example, to what are known as threshold acquisitions. These are entrepreneurs or legal persons who do not exceed a certain employment threshold. Moving an object between two EU countries is also considered an intra-community acquisition if an entrepreneur initiates this and then uses the object in question at the destination himself.
Deliveries to third countries
While in connection with deliveries from the EU to the EU, usually the reverse charge proceduretakes effect, the procedure for deliveries to third countries is often more difficult. Because there is no uniform legal basis here. Rather, the respective procedure depends on the laws in the respective third country. Often, however, a regulation is used that differs only slightly from the reverse charge procedure mentioned above. Classic example: Switzerland. Here, too, the recipient of the service pays for the supplies or services that he has received from abroad. In some cases, revenue, for example if it comes from a company, is not recorded. This applies, for example, if the said turnover is not subject to tax under the law of the respective third country or the tax system of the third country cannot be compared with the system in Germany.
Free employee or entrepreneur benefits
In principle, sales tax is always calculated if it is based on taxable sales. Or to put it another way: for a service that is provided, the customer also provides something in return. If the said consideration is not provided, it is possible that there is still a taxable transaction. Exact regulations on this can be found in § 3, paragraph 1b and in § 3, paragraph 9a of the Value Added Tax Act. It is not necessarily important that the service in question is related to a non-company purpose or that input tax has been deducted in advance. It is not always a prerequisite that a service is performed for non-company purposes or that input tax has been deducted beforehand.