To cover the effects of the corona pandemic crisis the German government has already decreed several aid measures. We have already informed you about these aid measures in our TLI Steuerberater TV channel and via our website.
On June 3rd, 2020 the German government decreed a stimulus package for Germany. This stimulus package shall cover the economic consequences from the conrona pandemic.
This stimulus package contains several changes in the German Corporate Tax Code, with regard to depreciation and in the German VAT Code. We will inform you with a separate news posting about the changes in the Income and Corporate Tax Code.
The stimulus package contains a temporary reduction of the German VAT rate. This change has an effect for all companies doing business in or with Germany.
For the period July 1 until December 31, 2020 the regular VAT rate from currently 19 % shall be reduced to 16 % and the already reduces rate for special deliveries (e. g. food) shall be reduced from 7 % to 5 %.
Due to the close effect (July 1st) this means for all companies a very fast action.
TLI Steuerberater recommends already now to prepare the IT system for the new VAT rates. Invoices issued for supplies or services rendered within the period July 1st until December 31st 2020 have to show an other VAT rate than today. If you are working with an accounting or ERP-system we advise to contact your IT provider as soon as possbile to discuss this changes. In case of an automatic tax finding the new tax labels and the temporary conditions have to be implemented.
With regard to the changes of the VAT rates please note the following:
- We assume that the invoice date will not be relevant for the applicable VAT rate. Relevant for the applicable VAT rate will be the day of delivery / service.
- You are obliged by the German VAT Code to revise invoices issued with a wrong VAT rate. In case of a wrong issued VAT rate the issuer owes this wrong amount. A revision is an unnecessary and cost-intensive administrative effort.
- Incoming invoices should be monitored with respect to the correct VAT rate.
- For prepayments, later changes of the net amount, for vouchers, etc. there are several special rules.
- In case of continuing obligations (e. g. leasing) the contract has to be revised if this contract contains information to the VAT rate or VAT amount.
Please consider that this information comes very early. This decree of the German government is still not German law.
But the implementation of this decree into German law is expected within the next days / weeks. Please consider that the aforementioned information can change until the dicision is fully implemented into German tax law.
We assume that the German financial administration will clarify within the next weeks some details within an official letter.
Please find futher information to VAT here on our website.
Christian Dobner | TLI Steuerberater