Value added tax is levied on the respective value of the goods for every commercial intermediate sale and for sales to the end customer. The middleman can have the tax office reimbursed the amount of sales tax that he himself paid (input tax) or offset it against outstanding claims. Only the added value created, the difference between costs and sales price, is actually taxed. The legal regulations on value added tax are listed in the Value Added Tax Act.
The amount of VAT
There are two rates of VAT in Germany: the normal rate of 19% and the reduced rate of 7%, which applies to everyday items (e.g. groceries, books and newspapers). The German state does not levy VAT on some products and services (e.g. certain postal services). The revenue from VAT is divided among the federal and state levels using a complex calculation.
VAT in the EU
There is VAT in every country in the EU. It is charged for all transactions within the EU. However, their amount differs from country to country. Other rules apply to business with non-European countries.
Profit before tax, also known as pre-tax profit named, called a in business administration code and is the result of the profit and loss account of a company. It is calculated as the operating result plus the financial result and extraordinary result, or alternatively as the annual surplus plus the net tax expense. There are differences between tax law, commercial law (HGB) and international accounting procedures such as IFRS or US GAAP. Using the sales tax calculator is important there.
Pre-tax profit regulations
As a result, it is more difficult to make a comparison based on the reported profit before taxes, since different rules apply here. In this respect, the pre-tax profit under tax law is particularly important , as this is the basis for tax payments by the company as well as the tax expenses shown according to HBG regulations in order to obtain reference values and to calculate the productivity of a company and the return on equity .
Profit before tax as an application metric
As an application key figure in controlling and in financial analysis, a clear picture emerges here, since the profit before taxes is adjusted for any tax effects . If this value is related to sales, the result is a tax-independent view of the company’s profitability.
VAT is a tax that relates to the results achieved by manufacturing products and perform services company turnover is one of the main control means of the treasury and about yields 25% of total tax revenues. The standard tax rate for sales tax in Germany is currently 19%; it is set at a reduced rate of 7% for everyday goods such as food, books or magazines.
Conclusion
In the practical example it looks like this: A company sells a coffee machine for € 119. This price is made up of the sales price of € 100 and the sales tax to be paid of € 19 together. The company pays the tax, but gets it back from the customer.