Which value-added tax rates apply to which products?
March 21, 2023 | 40,00 EUR | answered by Lina Sauer
Dear tax consultant,
My name is Piotr Höfer and I run a small online trading company that sells various products. Lately, I have been having recurring problems with correctly calculating the sales tax for my products. I am unsure which sales tax rates apply to which of my products and how to correctly show them on my invoices.
Currently, I offer both physical goods such as clothing and electronics, as well as digital products like software and e-books in my online shop. I am aware that different sales tax rates apply to different product categories, but I am having trouble understanding and applying the exact regulations.
My concern is that I may be calculating incorrect sales tax rates, leading to tax errors that could result in legal issues. Therefore, it would be very important for me to receive a clear overview of which sales tax rates apply to my various products and how to correctly show them on my invoices.
Could you please provide me with a detailed list of the applicable sales tax rates for physical goods, digital products, and other product categories? Are there any specific regulations or exceptions that I need to be aware of? And how can I ensure that I calculate and show the sales tax correctly to avoid potential tax errors?
Thank you in advance for your help and support.
Sincerely,
Piotr Höfer
Dear Mr. Höfer,
Thank you for your inquiry regarding the correct calculation of value-added tax for your various products in your online trading company. It is understandable that you feel unsure and want to avoid possible tax errors. I am happy to assist you in understanding the applicable VAT rates for physical goods, digital products, and other product categories, and correctly stating them on your invoices.
In Germany, there are basically three different VAT rates for calculation: the standard rate of 19%, the reduced rate of 7%, and the reduced rate of 5%.
- The standard rate of 19% applies to most goods and services that do not fall under the reduced rates. This usually includes physical goods such as clothing and electronics.
- The reduced rate of 7% applies to certain goods and services, such as food, books, and magazines. It is important to check if your products fall under this rate.
- The reduced rate of 5% is applied to certain goods and services considered essential, such as certain foods, certain medicines, or cultural goods.
Special regulations apply to digital products such as software and e-books. Since January 1, 2015, digital products are generally subject to the VAT rate of the country where the buyer is located. This means that you must apply different VAT rates depending on the residence of your customers.
To ensure that you calculate and state the VAT correctly, I recommend contacting a tax advisor specializing in VAT. They can help you understand and apply the exact regulations for your products to avoid possible tax errors.
I hope this information is helpful to you and I am available for any further questions. Thank you for your trust and all the best for your online trading company.
Best regards,
Lina Sauer
Tax Advisor
