Understanding the Advance Sales Tax Return: Procedures, Risks, and Consequences

1. Introduction

The advance sales tax return is an essential part of German tax law and serves to record and pay sales tax to the tax office at an early stage.

It fulfills an essential part of securing tax revenue.

Because of both the nature of the assessment via the (self-)taxation procedure according to the sales tax law and the security of the state tax, this area harbors the risk of the tax crime of tax evasion being realized quickly and unnoticed.

2. The taxation procedure according to the sales tax law

The taxation period for sales tax is in principle the calendar year (see Section 16 Paragraph 1 Sentence 2 UStG).

In order to secure tax revenue, the entrepreneur must generally submit a so-called advance declaration by the 10th day after the end of each calendar quarter (Section 18 Paragraph 1 Sentence 1 in conjunction with Section 18 Paragraph 2 Sentence 1 UStG).

The advance VAT return must generally be made electronically (Section 18 Paragraph 1 Sentence 1 UStG).

In this pre-registration, the entrepreneur must report the sales of the relevant calendar quarter (pre-registration period) to the tax office and calculate the sales tax owed himself.

This is a tax declaration within the meaning of Section 150 Paragraph 1 Sentence 3 AO.

If the tax for the previous calendar year is more than EUR 7,500.00, the calendar month is the pre-registration period in accordance with Section 18 Paragraph 2 Sentence 2 UStG.

If the tax for the previous calendar year does not exceed EUR 1,000.00, the tax office can exempt the entrepreneur from the obligation to submit advance returns and pay advance payments (see Section 18 Paragraph 2 Sentence 3 UStG).

For entrepreneurs who are just starting their activity, i.e. in cases of setting up a new company, the calendar month in the current and following calendar year is always the pre-registration period, Section 18 Paragraph 2 Sentence 4 UStG.

3. Danger and realization of tax evasion in the pre-registration procedure

The advance sales tax return is a critical point in the German sales tax system, which is why the legislature immediately sanctions violations in the context of assessment.

If entrepreneurs and/or those responsible consciously provide false information at the end of the pre-registration period or do not register at all (despite the obligation to pay the tax), there is an accusation of tax evasion according to Section 370 AO.

In addition, if the advance declaration and tax payment are too low or even omitted, interest will be charged on arrears.

4. Conclusion:

The advance VAT return is a complex procedure that should be carried out carefully and conscientiously.

The risk of tax evasion is real and can have serious consequences for the company and its business.

Through proper accounting, the use of technology and the use of advisory services, risk can be minimized and both financial and legal disadvantages avoided.

This article does not represent specific and individual legal advice, but rather only provides a rough initial overview of the very complex legal matter described. You can only obtain legal certainty for your specific case constellation through coordinated examination and advice from an expert lawyer.

I would be happy to assist you as a lawyer and specialist lawyer for a legal assessment and assessment of your case and represent your interests assertively and resolutely. the tax authorities and the tax investigation. Please feel free to contact me by phone or write to me.

I advise nationwide on site or via Zoom as a specialist lawyer in the legal areas of corporate law, tax law and insolvency law, including in the cities and metropolitan areas around Stuttgart, Heilbronn, Karlsruhe, Freiburg, Ulm, Augsburg, Munich, Frankfurt, Wiesbaden, Saarbrücken, Kaiserslautern, Bonn, Wuppertal, Duisburg, Nuremberg, Münster, Saarbrücken, Düsseldorf, Cologne, Dortmund, Hanover, Kassel, Leipzig, Dresden, Bremen, Hamburg and Berlin.

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