Payment of tax
On principle, the value-added tax is incurred at the end of the reporting period during which the taxable supply of goods or service was provided.
Within 10 days of the end of each calendar quarter, the entrepreneur has to send the tax office a VAT tax return in which it has to give its own computation of the tax for the preceding calendar quarter (reporting period). The amount payable is the value-added tax invoiced minus the amounts of input tax which may be deducted. The amount thus calculated has to be paid to the tax office as an advance payment. Larger businesses have to submit this advance return every month. For businesses which have only just taken up professional or commercial operations, the monthly reporting period likewise applies during the first calendar year and in the year after that.
Upon application at the local tax office the entrepreneur can reach an agreement about permanent extension of time for his monthly/quarterly advance return and the advance payments (so called “Dauerfristverlängerung”).
At the end of the calendar year, the entrepreneur has to submit an annual VAT tax return in which it again has to calculate the tax itself.
Entrepreneurs effecting turnover which is exempt from value-added tax may not deduct the input tax that is invoiced to them.