How do I calculate the value-added tax for my products?
June 27, 2023 | 40,00 EUR | answered by Günther Hering
Dear tax advisor,
my name is Anna Wittkopf and I run a small business that sells handmade products. So far, I have not dealt intensively with the topic of value-added tax and now I am faced with the challenge of correctly calculating the value-added tax for my products.
Currently, I sell various handmade products such as jewelry, accessories, and decoration items. I have so far indicated the prices for my products without value-added tax, as I am not sure how to correctly calculate the value-added tax. However, since I now want to expand my range and also sell larger quantities of my products, it is very important for me to calculate the value-added tax correctly in order to avoid any tax problems.
I am worried that I might make mistakes in calculating the value-added tax and could therefore face tax problems or even back payments. Therefore, I would like to know from you how I can correctly calculate the value-added tax for my handmade products. Are there any special regulations or exceptions that I need to consider? What specific steps do I need to take to calculate the value-added tax correctly?
I would be very grateful if you could help me calculate the value-added tax correctly for my products so that I can further develop my business without risking any tax problems.
Thank you in advance for your support.
Best regards,
Anna Wittkopf
Dear Mrs. Wittkopf,
Thank you for your inquiry regarding the calculation of value added tax for your handmade products. I understand your concerns and would like to help you correctly calculate the value added tax to avoid tax issues.
First of all, it is important to know that the current value added tax rate in Germany is 19%. This means that an additional 19% value added tax must be added to the selling price of your products. So, for example, if you sell a handmade bracelet for 20€, you will need to calculate an additional 3.80€ in value added tax.
However, there are also products that are subject to a reduced value added tax rate. This includes items such as food, books, or certain cultural events. Handmade products like jewelry, accessories, and decorations usually fall under the regular value added tax rate of 19%. It is important to know the correct tax rate category for your products in order to calculate the value added tax correctly.
To calculate the value added tax correctly, you need to multiply the net price of your products (without value added tax) by the value added tax rate. The result is the amount that you need to add as value added tax to the selling price. It is important to clearly indicate the value added tax on your invoices so that your customers can understand how the final price is composed.
It is also recommended to regularly review your advance tax return to ensure that you are calculating and remitting the value added tax correctly. If you are unsure whether you have done everything correctly, you can also consult a tax advisor who can assist you with the correct calculation and remittance of the value added tax.
I hope this information helps you in calculating the value added tax for your handmade products. If you have any further questions, please feel free to contact me.
Sincerely,
Günther Hering
