June 20, 2024


Phenomenal Business

The Use of the Sales Tax Solutions in the Proper Ways

Many institutions such as educational and cultural institutions, cities and municipalities and also non-profit organizations are exempt from sales tax. If they present you with a corresponding certificate for your accounting, you will not charge any sales tax to these invoice recipients under certain conditions. The prerequisites are listed in the Sales Tax Act § 4 No. 20b) UStG and relate to events in cooperation with organizations that are exempt from sales tax. Again, you have to add a note to your invoice. 

“Sales tax-free service according to § 4 No. 20 UStG

A certificate from the client is available. “Public facilities include, for example, theaters, museums, public zoos, animal parks, libraries or archives. 

Bills for tuition

The § 4 no. 21 UStG regulates in its portions a and b, the tax treatment of teaching sites and educational services. Schools, seminars or training centers as well as the independent teachers, coaches or trainers who work there are exempt from sales tax. Exactly formulated requirements apply to the exemption from taxation, such as state or official approval of educational institutions. Independent lecturers and teachers who teach at a private school or vocational training institution can apply for a certificate of exemption from sales tax in accordance with Section 4 No. 21 a) bb) UStG.

Invoices for exempt groups of goods and services – no sales tax

The legislature has exempted selected groups of goods and services from the obligation to levy sales tax. In addition to deliveries abroad and intra-community deliveries, services for sea and air transport, insurance and loan brokerage are also exempt from sales tax. Use the sales tax calculator  in this case.

In addition, sales tax is not levied for other fixed services. This includes medical treatments or services that serve to maintain health. For this reason, dentists, naturopaths, therapists or nursing services do not levy sales tax. Artistic performances are also exempt from sales tax. As an actor or dancer, you submit an invoice without sales tax. The sale of items related to artistic performances, on the other hand, is subject to normal VAT of 19%. 

“That’s right,” says the customer, and gives the waiter the change as a tip. A scene that happens a million times a day in Germany. A few cents here, a few euros there: In some industries, employees also receive tips in addition to their salaries, because this is customary. But is this tip tax-free?

Employees – is their tip tax-free?

In fact, there is a law on the tax exemption of employee tips, with which a change in the income tax law came about in 2002. There today, in Section 3 no. 51 EStG, it is clear and brief that “tips that are given to the employee by third parties voluntarily and without any legal entitlement to them on the occasion of a work performance are given in addition to the amount to be paid for this work performance” , Are tax-free.