VAT is generally known as Umsatzsteuer in Germany. Formerly, the value added tax was referred to as the Mehrwertsteuer. This term is still prevalent in some parts of the country.
The business entities in Germany add VAT prior to the pricing of the product and services. The gross price of goods in Germany includes the 19% VAT charges. The business enterprises submit the reports of taxation monthly and are required to pay the taxes on a monthly, quarterly or yearly basis. The reports also comprise of computation of tax for the ensuing quarter. The period of tax payments is dependent on the annual turnover of the company. The amount for tax is paid in advance to the tax office. Most of the large scale producers are required to submit their advance on a monthly basis.
The value added taxes payable by the business entities in Germany include the taxes paid by the companies on purchase of goods and services. This is balanced through returns on VAT. This is known as input VAT or Vorsteuerabzug in Germany. In most occasions, the business entities pay more tax than what they receive. In later stages the authorities return the excess tax paid as soon as the computations are complete. This situation is frequent in the start-up phase where the company's expenditure is more than its income from sale.
Some of the goods and services are exempted from payment of the value added tax in Germany. Some of these are listed below:
No VAT is charged on intra-community shipments such as a sale of goods to another commercial organization among the members of the European Union. However, the recipient entrepreneur is subject to acquisition tax that is payable to the authorities. This is similar to the input VAT and is refundable.