Standard taxation - how it works

01-06  Source: Network gathering  Views:0 

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Standard taxation - how it works

Can VAT be expelled? KFM / Pixelio

Definition standard taxation

The term standard taxation counts for VAT and can be defined as follows:

  • The IRS distinguishes the so-called Small traders whose turnover does not exceed a certain amount per year, and the "normal" company.
  • Small enterprises have to pay any VAT to the tax authorities, which is why they also may not appear on the bill. In return, you may settle but also no tax at the tax office.
  • All companies that do not fall under the small business regulation, subject to standard taxation.
  • This states that all sales turnover should be calculated. This is either the normal rate of 19%, or at the reduced rate of 7%.

As the standard taxation in detail expires

If you are an entrepreneur usually taxation, then please note the following:

  1. Each turnover achieved must be assigned to the sales tax. This means that every invoice must both the tax rate and the VAT amount.
  2. This sales tax you can of course as companies withheld, but they must pay it to the tax office.
  3. On the other hand, you may deduct any tax, the tax is the sales tax that you have to pay when buying goods to other businesses.
  4. In practice, this means that you need to calculate the difference between the obtained value added tax and tax paid and pay the difference in value to the tax authorities.
  5. Depending on the achieved annual revenue, you must VAT returns in certain intervals proposed (eg monthly).
  6. but small businesses are also expected to decide upon the first registration of a trade for the standard taxation.
  7. This has mainly makes sense when you need to make a lot of investments for the start-up companies and therefore are subject to a high amount of input tax. After a period of 5 years, you are allowed to again decide whether you want to continue to be subject to standard taxation or if you then want to change to the small business regulation, of course, only if you do not exceed the limit of annual turnover.
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