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What is VAT? / How VAT Works
VAT rules can be very complicated and differ from country to country. Below is an illustration of the VAT and money flow in the simplest of transactions.
A German company (A) purchases and sells computer products from and to German companies. Below is a description how the VAT tax works for this company (A):
*VAT is not a cost to the company(A). It is accounted for on a Balance Account.
**The customer(B) can deduct the VAT if they are a company, registered for VAT. Their cost is then 200.00.
VAT Return filed to the German Tax Authorities
The German company(A) declares to the German tax authorities:
The company’s Profit & Loss is not affected by the VAT. Only the cash flow.
Conferences and Tradeshows
e-invoicing (Electronic Invoicing)
Electronically Supplied Services
Hotel and Transportation
Installations and Maintenance contracts
Inter-Company (travel delegations, services, seminars)
Logistics and Warranty Products
Professional Fees and Marketing
Research and Development
Sales through websites in the EU
Taxpayer status and VAT on Services
Telecom and Network Services
TV and Motion Picture Production
VAT - New VAT Rules on Services
VAT Refund Steps
Frequently Asked Questions
What is VAT?
How VAT Works
VAT Standard Rates
VAT Filing Deadlines
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