What does Sales Tax Mean? Part 3

What happens to the sales tax?

Everyone has to pay sales tax, but what happens to all the money? The general public can only benefit from the tax revenue if the money is properly divided between the federal, state and local governments. That is why the tax is called community tax among experts. These taxes also include other payments such as wage tax or income tax , corporation tax and sales tax.

Who gets how much of the money is determined differently. For example, the federal states and the federal government receive 42.50 cents for every euro they collect, while the municipalities claim a full 15 cents. The situation with trade tax is different, because here even 78 cents of one euro remain with the municipalities, federal and state governments only get 16 and 6 cents.

Who is exempt from sales tax?

Anyone who registers with the tax office as a small business owner (and of course fulfills the relevant requirements) is exempt from sales tax. This means that in the case in question you will not include any sales tax on your invoices. Many private customers in particular should be happy about this aspect. After all, they pay a lower total amount. In contrast, many companies prefer service providers who report sales tax. At least it gives you the opportunity to reduce your own sales tax burden.

As already discussed above, it is important that – if you want to take advantage of the small business regulation – you were not able to book more than 22,000 euros in sales in the last year before the application. In addition, your sales in the current year must not exceed the limit of 50,000 euros.

What applies to small business owners?

According to TOPBBACOLLEGES.COM, sales tax is due when sales are made. So if you write an invoice, you must also list the sales tax on it. However, it also depends on which company it is, because not all of them have to comply with sales tax.
Sales tax and sales tax are one and the same tax, this is also called a traffic tax. Usually every company has to calculate sales tax, but there are exceptions. The sales tax may only appear on an invoice if the invoice issuer has received an ID number from his tax office. If there is only one invoice that is written, it must not contain sales tax.

Large companies actually have to pay sales tax, for a small business owner this only applies if he earns less than 30,000 euros and that within 5 years. If the amount is exceeded even once in these 5 years, it can be assumed that he will have to make an additional payment to the tax office.

Who calculates sales tax?

How high the total sales tax is is not calculated by a tax office, but by an entrepreneur himself. This is not easy at all, because several factors play a role. It also depends on whether and how much has been invested, for example in an expensive machine, then it may even be that the entrepreneur gets money back from his father’s state.

If that is the case, he can request the money with an annual income tax adjustment. This in turn is calculated by a tax office and in the best case, there are too many taxes paid back. The sales tax or value added tax is increased every few years and the state earns a lot. After all, every purchase that a citizen makes is subject to tax. Not even a meal in an inn or ice cream in the ice cream parlor are excluded.

The tax sweeps billions of euros into the pockets of the state every year. This tax is also called end-consumer tax, because it is due when a company or company provides a delivery or service. It does not matter whether it is a private person or a company. In the past 40 years the tax has been increased again and again and now, as already mentioned, it is 19 percent. However, this 19 percent only applies within German borders, because in some countries it is significantly higher or lower.

If you don’t know how to calculate sales tax, you should use a sales tax calculator. They are very easy to use, because only the net amount and the sales tax rate have to be entered. These computers can be found quickly on the Internet and therefore exact invoices can also be created.


Sales tax is one of the main sources of income for the state. Accordingly, it goes without saying that you should make the relevant pre-registrations properly and conscientiously. However, it would certainly be wrong here to define sales tax merely as a payment burden or as a “penalty”. Because: those who pay sales tax can also claim the sums of input tax that they have paid to their suppliers and service providers.

Here it can help to list the following characteristics of this particular type of tax over and over again …:

  1. The sales tax you list on your bills is money that is de facto not yours anyway
  2. By paying the sales tax prepayment, you prevent payment difficulties at the end of the year.
  3. Those who invoice with sales tax are often preferred by larger companies when comparing offers.

And: thanks to modern accounting programs, you no longer have to calculate your corresponding payment (or reimbursement) yourself. Here it is sufficient to simply enter the relevant invoice data and display the result. After all, in addition to properly managing your bookkeeping and observing the relevant legal deadlines, it is also important to be able to concentrate sufficiently on general day-to-day business.

Sales Tax 3