What happens if the sales tax is too low?

Joseph B. Hash

If, due to an incorrectly calculated sales tax, too little was wrongly paid to the tax office within an invoice, the invoice issuer owes the tax office the actual tax amount. In this case, the biller is obliged to correct the incorrect advance VAT return for the relevant period and […]

If, due to an incorrectly calculated sales tax, too little was wrongly paid to the tax office within an invoice, the invoice issuer owes the tax office the actual tax amount. In this case, the biller is obliged to correct the incorrect advance VAT return for the relevant period and to pay the difference. If the correction is not made and the incorrect sales tax amount is discovered as part of a special sales tax audit, the biller must pay the shortfall plus a late payment surcharge. The invoice recipient is only allowed to deduct the sales tax amount that is too low as input tax , although the invoice legend has to pay the actual, higher sales tax to the tax office.

The Corrective Measures

According to § 14 Paragraph 6 UStG in conjunction with § 31 Paragraph 5 UStDV, an invoice with a sales tax that is too low can be corrected by canceling the old invoice and issuing a new invoice with the correct sales tax amount. In addition, the corrected advance sales tax return must be submitted to the tax office and the deficit paid. For a customer who is subject to sales tax, a new invoice with a higher sales tax amount is not a problem, as he receives the increased sales tax amount back from the tax office as an input tax deduction. For private consumers, however, paying back the deficit in sales tax is problematic because the fee for the service increases for them. Use the sales tax calculator for the best results.

Unauthorized tax ID

If small and private entrepreneurs compose invoices and unjustifiably show the sales tax, they are obliged to pay the tax amount to the tax office according to § 14c para. 2 UStG.

Correction: The invoice issuer can apply to the tax office in writing to correct an invoice with an unauthorized tax ID. In addition, the unauthorized tax ID must be declared invalid to the invoice recipient. If the invoice recipient has not yet received an input tax deduction from the tax office, the authority pays the tax amount back to the invoice issuer after the correction request. However, if the input tax deduction has already been claimed by the invoice recipient, the invoice issuer will only be reimbursed its tax amount as soon as the invoice recipient has corrected the input tax and paid the amount back.

Conclusion: Incorrect VAT can be expensive

An invoice recipient who has claimed the input tax from an invoice with incorrectly calculated sales tax can also be subsequently revoked the input tax deduction. In this case, however, the recipient of the invoice has a purely theoretical claim for damages against the issuer of the invoice, as the invoice issuer violates his obligation to issue a proper invoice, according to a judgment of 9/28/2006.

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