The short-term reduction of VAT rates to 16 and 5 percent on 1 July 2020 has surprised everyone.

Note: This makes perfect sense from an economic point of view, as a longer advance notice would probably have postponed even more consumer decisions in the current crisis situation than is currently the case.

As of today, the draft bill has not yet been officially announced. Only the hint that tobacco should continue to be subject to 19 percent Value Added Tax has already been made public.

Nevertheless, there is currently a lot of uncertainty, especially on the part of tax consultants.

Tax consultants are now asking themselves: How do I book and report the turnover of my clients in the near future?

Here, however, it looks like pragmatic solutions, as the following information from the State Office for Taxes in Bavaria from today (10 June 2020) shows.

  • Value Added Tax-pre-registration: The sales at the new tax rates (16 and 5 percent) are entered collectively in the key figures for other tax rates (key figure 35). This therefore does not require any adjustment in the current form.
  • Value Added Tax Annual declaration: The sales at the new tax rates (16 and 5 percent) are entered collectively in the key figures at other tax rates. This therefore does not require any adjustment in the current form.

The instructions for the sample forms will be amended in the coming week and then published promptly.

What happens next?

The law is expected to be passed in June. Shortly afterwards, the Federal Ministry of Finance will (hopefully) explain in a letter which simplifications will (or will not) be made during the transition period.

We will definitely keep you up to date #vatislove

Effects for Taxdoo users?

With Taxdoo you are on the safe side. If you also use our DATEV interface, your financial accounting will continue to run safely and cleanly, fully automated - see here.

Taxdoo is the Compliance platform for the digital economy

... and, in addition to handling the current online retailers in Europe, forms the Value Added Tax compliance with numerous other compliance services via a unique platform.

If you want to know more about how you Value Added Tax -Compliance, financial accounting and much more can be mapped efficiently and securely via a platform, then book your individual and free initial interview with the compliance experts of Taxdoo via this link!

You are also welcome to register for our regular demo webinar in which we will introduce Taxdoo and our compliance services and answer your questions personally.

P.S.: Taxdoo has been an official partner of DATEV in online trading since the beginning of 2020.