ᐅ Reduced value-added tax until the end of 2020. How to proceed with invoices?
Created on: 4 Jun 2020 10:23
A
annab377
Hello everyone,
The coalition government reduced the VAT from 19% to 16% from July 1, 2020, to December 31, 2020. This should also be interesting for homeowners.
However, I have some questions about how this works in practice. Does this only apply to invoices issued by the end of the year? Or do the payments also have to be made by then?
Is it possible to arrange with contractors to issue the invoice in December 2020, but I pay only in February after the work is completed? In that case, do I still pay the reduced VAT rate, or is the invoice amount 3% too low and I have to pay the difference in February?
What do you think?
Best regards
The coalition government reduced the VAT from 19% to 16% from July 1, 2020, to December 31, 2020. This should also be interesting for homeowners.
However, I have some questions about how this works in practice. Does this only apply to invoices issued by the end of the year? Or do the payments also have to be made by then?
Is it possible to arrange with contractors to issue the invoice in December 2020, but I pay only in February after the work is completed? In that case, do I still pay the reduced VAT rate, or is the invoice amount 3% too low and I have to pay the difference in February?
What do you think?
Best regards
H
hampshire8 Jun 2020 14:13I need to correct myself – with interim and final invoices, this does not work; @saralina87 and @SimBaPa are right. Only individual invoices are possible.
B
Boomercringe18 Dec 2020 10:15Hello,
We are also in a situation where we are paying for a fixed-price contract with progress payments, and our construction will only be completed in Q1 2021.
Is the following approach generally possible – at least that’s how I understood it from my tax advisor? According to the general contractor’s tax advisor, the entire contract would need to be canceled and redone.
- For the services rendered from 01.07 to 31.12, a partial acceptance will be carried out through our home savings contract.
- Furthermore, an additional agreement will be appended to our fixed-price contract regarding this.
If this is possible, of course, further questions will arise.
Thank you & good luck
We are also in a situation where we are paying for a fixed-price contract with progress payments, and our construction will only be completed in Q1 2021.
Is the following approach generally possible – at least that’s how I understood it from my tax advisor? According to the general contractor’s tax advisor, the entire contract would need to be canceled and redone.
- For the services rendered from 01.07 to 31.12, a partial acceptance will be carried out through our home savings contract.
- Furthermore, an additional agreement will be appended to our fixed-price contract regarding this.
If this is possible, of course, further questions will arise.
Thank you & good luck
I
Isokrates18 Dec 2020 10:50Boomercringe schrieb:
According to the general contractor’s tax advisor, the entire contract would need to be canceled and redone. However, the tax office will only acknowledge this if there are valid reasons for terminating and reissuing the contract.
If the only justifiable reason is tax savings, this will be considered an abusive arrangement, and the entire project will still be subject to 19% VAT.
B
Boomercringe18 Dec 2020 11:24So, terminating the contract is not my preferred option either. Unfortunately, you can only find general scenarios on this topic, but little detailed information – even the article from the Homeowners' Protection Association assumes a legal implementation.
What we would have preferred is to carry out the acceptance of the partial work, including additional agreements.
What we would have preferred is to carry out the acceptance of the partial work, including additional agreements.
I
Isokrates18 Dec 2020 11:44Boomercringe schrieb:
If we wanted to carry out the acceptance of the partial performance including additional agreementsThe same principles apply as with the cancellation. A reasonable and justifiable reason must be provided for any subsequent changes. The desire to save taxes is unfortunately not sufficient for this.
These are the same basic principles as with the last VAT change.
There is now also a very detailed official letter from the Federal Ministry of Finance (BMF) on this topic.
I
Isokrates18 Dec 2020 11:50Alessandro schrieb:
As I understand it, shouldn't the total gross price (calculated with 19%) be multiplied by 0.81 to get a net amount and then multiplied by 1.16?It would be more accurate to divide the total gross price by 1.19 and then multiply by 1.16.