What exceptions are there to the obligation to pay value added tax?
March 4, 2022 | 30,00 EUR | answered by Friedhelm Sauer
Dear tax advisor,
I am Oliver Schlüter and have been running a small online trading company for some time now. So far, I have taken care of the taxation of my sales, but now I am facing a question that is making me somewhat uncertain. I have heard that there are exceptions to the obligation to pay sales tax and therefore wanted to inquire more precisely about what options exist in my case.
Currently, I am not generating high sales and therefore am not yet liable for sales tax. However, I plan to expand my business in the future and therefore want to have all tax aspects in mind already. I am thinking about how the obligation to pay sales tax could affect my prices and profit margin, and what impact it would have if I had to pay sales tax after all.
My concerns mainly lie in the fact that I do not know exactly what exceptions there are to the obligation to pay sales tax and whether my company could possibly benefit from them. Therefore, I would like to know from you if there is a possibility in my case to be exempt from the obligation to pay sales tax and what steps I would have to take for that.
Could you please explain to me in more detail what exceptions there are to the obligation to pay sales tax and whether these could also apply to my company? I would greatly appreciate your expertise and support on this matter.
Thank you in advance.
Sincerely,
Oliver Schlüter
Dear Oliver Schlüter,
Thank you for your question regarding value added tax and exceptions to the obligation to pay value added tax. It is good that you are already thinking about the tax aspects of your online trading business and seeking information to avoid any surprises in the future.
First of all, it is important to know that in Germany, every entrepreneur who makes sales is generally subject to value added tax. This means that as an entrepreneur, you are generally required to show value added tax on your invoices and remit it to the tax office. However, there are certain exceptions to the obligation to pay value added tax, which small businesses like yours can also benefit from.
One of the most important exceptions to the obligation to pay value added tax is the small business regulation according to § 19 UStG. According to this regulation, businesses are exempt from value added tax if they did not exceed a total turnover of 22,000 euros in the previous calendar year and are not expected to exceed a total turnover of 50,000 euros in the current calendar year. So if you are currently not generating high sales, you could fall under the small business regulation and be exempt from value added tax.
To make use of the small business regulation, you must apply for it at the tax office. You do not have to show value added tax on your invoices, but you are also not allowed to claim input tax deduction. However, there are also other exceptions to the obligation to pay value added tax, e.g. for certain tax-exempt sales or for small businesses within the meaning of § 6 para. 1 no. 27 UStG.
It is important that you seek individual advice in your specific case to find the best solution for you. I am available in my online consultation hours to continue discussing your questions and help you make a decision. It is important to keep all tax aspects in mind to avoid any unpleasant surprises.
I hope this information is helpful to you and I am happy to assist with any further questions.
Best regards,
Friedhelm Sauer
