May 25, 2024


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Every entrepreneur and business start-up must submit a sales tax return to the tax office at regular intervals. The only exceptions are those people who make use of the small business regulation or who are exempt from sales tax for other reasons.

Even if it is not always easy to grasp all the laws that go along with the advance VAT return, every self-employed person should familiarize himself with it.

This is the only way to avoid possible disadvantages that could be the result of a late or incorrect VAT return.

The purpose of the advance VAT return

Although sales tax is an annual tax, the state insists that the entrepreneur submits the sales tax return either quarterly or monthly.

  • In this way, the risk of payment default on the part of the entrepreneur, which would be very high if sales tax had to be paid once a year, should be significantly reduced.
  • In addition, the state would like to obtain an interest rate advantage in any case. However, it should not go unmentioned that the entrepreneur enjoys some advantages through the VAT return.
  • By distributing the tax burden evenly over the year, payment difficulties should be avoided at the end of the year. If there is a VAT reimbursement, the entrepreneur would also have the opportunity to obtain a considerable interest rate advantage.
  • Every company in the EU needs a VAT ID no. However, this only applies to companies that are obliged to pay sales tax. Small business owners are not covered by this rule.
  • The sales tax ID is available on request from the Federal Central Tax Office.

Either the tax number or the VAT ID no be specified. It is better to use the latter as it cannot be misused. Every company can use it to check whether potential business partners are real companies. A request to the Federal Central Tax Office is sufficient. This confirms whether a sales tax ID is valid or not. In online tax filing this is very important.

Sales tax small business owners

Not all businesses have to levy sales tax, as the Sales Tax Act has some exceptions. Services in connection with banking, lotteries or rents enjoy privileges: Tax exemption applies here. In addition, companies with annual sales of less than 17,500 euros can waive the collection of sales tax in accordance with Section 19 UStG. The prerequisite is that the turnover for the current year does not exceed 50,000 euros. The term small business regulation has become established for this.

Tax ID

Entrepreneurs are identified with the sales tax identification number (VAT ID number for short) in the sense of sales tax. This applies to companies in all countries of the European Union. It is not to be confused with the tax ID or with the tax number.