The Sales Tax Conversion Process You Need to be Aware of

The sales tax rate conversion is relevant for every company and must be prepared at short notice. This changeover must be programmed accordingly or adopted as an update so that sales taxes are correctly calculated for all services / invoices from July 2020. But that’s just one aspect.

The Contributions

This is also a contribution to the economy, especially among software manufacturers / service providers and cash register system providers. Practically every entrepreneur is affected by this changeover (every cash register, every invoicing program, every ERP system, every accounting program, every online shop system is affected) and with a lead time of only 3 weeks for programming, system changeover, if necessary reprinting of invoice sheets, Adjustment of leasing and rental contracts etc. The whole thing back again in 6 months. For online tax filing this is important.

  • The new tax rates currently do not provide companies with any additional liquidity in what is sometimes the most difficult situation, as the effect only takes effect after a delay of up to three months. That’s because sales tax is a “trailing” tax that follows sales. First and foremost, entrepreneurs have to generate these sales with customers.
  • The advance sales tax payment for sales made in July is due on August 10th at the earliest. Since many entrepreneurs have applied for a permanent extension, they don’t even have to pay sales tax until September. Only then, months later, will the liquidity advantage be felt.

The consumer will certainly feel a cost advantage with large purchases (car, kitchen, property renovation), this will depend in particular on his negotiating skills. However, this group of people already has sufficient liquidity. A noticeable recovery will hardly occur here. At most the performing entrepreneur can feel an increasing demand. Before the end of July, however, sales will tend to decline if the investment can be planned for the buyer (will simply wait until July with the purchase).

  • A product that costs € 9.99 today will not be cheaper from July (€ 9.74). At the beginning of July, the re-pricing for each item would represent an immense additional effort for the specialist trade, which would not be advantageous for them.
  • As a result, it can be expected that the millions of recipients of low incomes, short-time work benefits, ALG I or II will not actually benefit from the VAT reduction.
  • Sales tax is a tax on all products and services. It is applied to everything that is carried out for a fee. The amount of sales tax corresponds to a fixed percentage that is automatically added to the final price of a product or service.

What is sales tax?

  • Sales tax amount
  • VAT calculator
  • VAT return
  • Tax ID
  • Sales tax small business owners

What is sales tax?

A tax that plays a particularly important role for entrepreneurs, but also affects every citizen in life, is the so-called sales tax (VAT).