What VAT rate to charge - we only have 6 months!

The government has decided and the citizen must pay it. Even though this will not boost the economy, we must charge the correct sales tax rate. Service providers, i.e. lawyers, tax consultants, architects, engineers, etc. provide their services over a certain period of time. It is by no means unusual for the service to drag on for several weeks and months. Especially in the case of legal disputes, it can even take years for the process to be completed. If you look at the tax legislation, then the termination of the performance is decisive for the sales tax.

Services and works are performed at the time of their completion." In the case of continuous services for a limited period of time, the service is completed at the end of the service period if there are no partial services (Section 13.1, paragraph 3 "UStAE"). This means for the service provider, when he has performed the last "service section", then he issues the invoice. If this is the case in the period 01.07.2020 to 31.12.2020, only 16% is to be invoiced. It will be difficult for service providers or work contractors to finish their services exactly in these 6 months in order to be able to charge the customer a reduced tax rate. We recommend seeking legal advice before invoicing, because the issuer is liable, not the recipient.

Claudia Frank
Specialist in tax law