How do I calculate the sales tax for my services?
January 17, 2022 | 50,00 EUR | answered by Lina Sauer
Dear tax consultant,
My name is Dennis König and I run a small business that offers services in the form of consulting and coaching. So far, I have not calculated any sales tax as I have fallen under the small business regulation. However, I now want to expand my business and generate more revenue, which is why I want to correctly calculate the sales tax.
I am unsure about how to calculate the sales tax for my services. My annual turnover is currently below 17,500 euros, but I plan to generate significantly more revenue in the future. What steps do I need to take to correctly calculate the sales tax? What factors do I need to consider?
I am concerned that I may make mistakes in calculating the sales tax and therefore have issues with the tax office. I also want to ensure that I correctly show the sales tax on my invoices and pay it to the tax office.
Could you please explain to me exactly how I need to calculate the sales tax for my services and what specific steps I need to take to do this correctly? Are there any special regulations that I, as a service provider, need to be aware of?
Thank you in advance for your support.
Best regards,
Dennis König
Dear Mr. King,
Thank you for your inquiry regarding the calculation of value-added tax for your services. As a tax advisor specializing in VAT consulting, I am happy to assist you with this.
First and foremost, it is important to note that you are currently eligible for the small business regulation according to § 19 UStG, as your annual turnover is below 17,500 euros. This means that you are exempt from VAT and do not need to show VAT on your invoices.
However, if you plan to increase your turnover in the future and exceed the threshold of 17,500 euros, you will need to correctly calculate and remit VAT. In this case, you must invoice VAT on your services and remit it to the tax office.
The VAT rate in Germany is currently 19% (or 7% for certain products and services). To calculate VAT correctly, simply multiply the net price of your service by the applicable VAT rate. The calculated amount will then be shown on your invoice.
There are exceptions and special regulations that you as a service provider must consider. For example, reduced tax rates apply in some cases, or there are specific regulations for certain services. Therefore, it is advisable to inform yourself in advance about these specifics or seek advice from a tax advisor.
To ensure that you do not make mistakes in calculating VAT and avoid problems with the tax office, I recommend keeping accurate records and carefully documenting all relevant documents. Additionally, you should submit your VAT returns correctly and on time to the tax office.
I hope this information helps you and answers your questions regarding the calculation of VAT for your services. If you have any further questions, please do not hesitate to contact me.
Best regards,
Lina Sauer
Tax Advisor
