Which tax rates apply to which type of goods and services?
November 27, 2023 | 30,00 EUR | answered by Felix Schönecker
Dear Tax Advisor,
I am facing the challenge of determining the correct tax rates for the different goods and services in my company. I operate an online business where I sell both physical products and digital products. So far, I have mainly focused on the standard tax rate of 19%, but I am unsure if that is correct in all cases. I am also unsure if I qualify for the VAT exemption for small businesses.
I have already done some research, but I am still not clear on which tax rates apply to which types of goods and services. I am also having difficulty distinguishing between the standard tax rate, the reduced tax rate, and the VAT exemption. I want to ensure that I calculate VAT correctly to avoid any issues with the tax authorities.
Could you please explain to me which tax rates apply to which types of goods and services and any special considerations to keep in mind? Are there any special regulations that may apply to my online business? I would greatly appreciate your assistance in clarifying these questions.
Sincerely,
Guido Tiefbach
Dear Mr. Tiefbach,
Thank you for your inquiry regarding value-added tax in your online business. Understanding and correctly determining tax rates can be a challenge, especially when dealing with different goods and services. I am happy to help you understand and differentiate between the various tax rates.
First and foremost, it is important to know that in Germany there are essentially three different tax rates: the standard rate of 19%, the reduced rate of 7%, and tax exemption. The standard rate of 19% applies to most goods and services, while the reduced rate of 7% applies to certain goods such as food, books, or cultural events. Tax exemption, on the other hand, applies to small business owners who generate less than 22,000 euros in revenue per year.
In the field of online commerce, there may be additional considerations to take into account. For example, when dealing with digital products like e-books, software, or online courses, you need to determine whether they are considered physical or digital products and apply the correct tax rate accordingly. Since 2015, the place of consumption has been crucial for the taxation of digital products, meaning that you may need to apply different tax rates depending on the location of your customers.
There are also special regulations that specifically apply to online commerce. For instance, you should be aware of the "One-Stop-Shop" (OSS) rules, which make it easier for you to account for VAT on cross-border services within the EU.
I recommend that you consult with a tax advisor to receive personalized advice and ensure that you are correctly invoicing value-added tax. I am happy to assist you with any further questions and help you clarify your tax matters.
Sincerely,
Felix Schönecker
