The correct VAT classification of transactions is becoming increasingly important, particularly in the case of tax audits. For example, if the invoices from suppliers or service providers are inaccurate, the deduction of input tax can be prohibited, which can quickly lead to considerable additional payments, as VAT is assessed on the basis of turnover and not profit. Errors in the payment of VAT can quickly lead to criminal investigations by tax authorities. With that in mind, the correct handling of transactions relevant to sales tax is mandatory.
No matter whether you are active only on the German market or also have relations abroad, we can provide you with competent support.The starting point of sales tax consideration is always the question of whether a transaction is relevant for sales tax at all. If it is, the main question is whether the transaction is tax-free or which tax rate is applicable. But then the central question is always compliance with the necessary formalities. These vary, in some cases considerably, depending on whether the transaction is domestic or foreign. The same applies to the value-added tax paid (referred to as input tax), which can only be deducted if the relevant guidelines are observed and the appropriate evidence is duly available. This is the only way protracted discussions with the tax authorities and the risk of considerable back taxes and interest can be avoided.
Also, special provisions of VAT law such as chain transactions, EU triangular deals, intra-community deliveries and acquisitions, import and export deliveries (including import turnover tax), taxation of travel services, average rate taxation, differential taxation etc. are only some of the special features that must absolutely be taken into account in order to exclude adverse tax consequences.
For foreign cases, we can also draw on the VAT-related expertise of the auditors, tax consultants and law firms associated through Allianz GGI.