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Question about value added tax and invoices at the end of the year

May 29, 2020 | 30,00 EUR | answered by Steuerberater Knut Christiansen

Dear Sir or Madam,

I have a question regarding the value added tax return. I work as a freelance translator and was a small business owner until 2018. Since 2019, I have been submitting quarterly VAT returns, and the VAT is also debited quarterly by the tax office (regardless of when the invoice was paid). Now, the following question arises regarding invoices at the turn of the year: For the income tax return, the cash basis principle applies, meaning I consider all actual income and expenses of the year 2019, regardless of the date of the invoice. But how does this apply to the VAT return? Does the same principle apply here? What about invoices that I issued in December but were only paid in the next year? I submitted the VAT return in December, but the VAT was only debited in January. Should these invoices be considered in the VAT return for 2019, or in 2020? And one last question: Should invoices from 2018 that I issued in December 2018 as a small business owner, but were only paid in January 2019, be listed in the VAT return as operating income without VAT? Thank you in advance for your help!

Kind regards,
Miriam

Steuerberater Knut Christiansen

Good day and thank you for using frag-einen.com!

I would like to answer your question as part of an initial consultation.

In principle, as part of income determination according to the German Income Tax Act (§ 4 para. 3 EStG), you have the option to calculate the sales tax based on the amounts received. This means that you only need to record the income in the year in the sales tax return (and sales tax pre-registration) when you have received the invoice amounts (cash basis taxation). Invoices from December 2019 that are only received in January 2020 would therefore only need to be recorded in the sales tax return for 2020.

The invoices that you have written as a small business owner also need to be recorded as income in the EÜR as a small business owner. Therefore, no sales tax is to be paid on this, just because the customers have paid them in 2019.

I hope this answers your question, if not, please feel free to contact me again with a follow-up question.

Best regards,

Knut Christiansen
Tax advisor