Difference between service tax and income tax
Taxing services and avoiding mistakes
The sales tax law regulates the tax rates
Self-employed persons who pay tax on a service must comply with the sales tax law. So basic knowledge about income tax is important. The professional associations publish appropriate manuals that provide information on income tax. This also shows what needs to be considered when creating the invoice so that everything can later be correctly presented to the tax office. For the self-employed, Section 12 of the Sales Tax Act is particularly important.
The demarcation is complicated
The 7% rule only applies to exceptions. Anyone who has to pay tax on a service is only affected in individual cases. 7% are z. B. due when selling live animals. This applies above all to agriculture. In addition, animal breeding companies must pay 7% sales tax. The reduced tax rate also applies to the sale of food. The book trade also benefits from the Value Added Tax Act. Dealers who deal in works of art, sheet music or collectibles are also affected. However, the law provides for many exceptions that keep causing confusion. So has z. B. the European Court of Justice ruled that only some horses may be taxed at 7% when they are sold. The full rate applies for sport and leisure horses.
Taxing services, but how?
Those who work in the service sector usually have to pay 19% sales tax. But this does not apply if z. B. trips are done on behalf of which are taxed at 7%. Creative professions are also taxed less. These are z. B. Photographers or designers. But that only applies as long as it is not about modern computer art. So anyone who creates radio plays or PDFs for the web has to pay the full sentence. It is also crucial whether you are the author yourself or just distribute something. For this reason, editors and translators have to pay 19% tax on their services.
Consult a professional association or tax office
It can happen that a self-employed person has to tax his various services differently. Depending on the professional field, the assessment is sometimes difficult even for the tax advisor to assess. To be sure, the responsible professional association should be asked in writing how the service should be taxed. The tax office can also provide information. Since errors could result in considerable financial disadvantages, such inquiries should also be made in writing. It is important that every change in the work content can also have an impact on how the service is to be taxed. Failure to do so could cause problems with your next tax return. Anyone who is self-employed and pays tax on a service is obliged to prepare the invoices correctly and, if necessary, to familiarize themselves with the topic.
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