value added tax

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The value added tax (abbreviated VAT. , Also TICKET PACKAGE INCLUDES , Switzerland VAT ) is on several levels of the value levied tax , which for the fixing revenues of companies with spending the company will be charged.

Difference to sales tax

VAT in the European Union is levied on every sale on the value added, i.e. H. on the difference between the costs charged with sales tax and the sales price. For this purpose, the value added tax is first levied on the entire proceeds (also: sales ) for each sale and then the input tax is reimbursed or credited .

With cumulative sales tax , tax is levied on all proceeds at each stage of trade or processing , thus accumulating in a sale across multiple stages of trade. In the case of sales tax according to the sales tax system, there is no accumulation of the tax burden.

The use of the term “sales tax” synonymously for “value added tax” without the explanatory addition “with input tax deduction” is misleading because the tax referred to as “sales tax” in Germany and Austria is a value added tax in terms of its fiscal content.


The idea of ​​a VAT goes back to Carl Friedrich von Siemens . When von Siemens criticized sales tax in 1919, the more companies a product passed through on its way to the end customer, the higher the tax burden. This favored large companies with a high degree of vertical integration (whose internal stations were not taxed as a matter of principle) and thus distorted competition .

It was not until the late 1940s that this practice began to be abandoned. France took these first steps, but without including all branches of the economy. The first all-sector sales tax was introduced in Michigan in 1953 .

At the turn of the millennium, around 120 countries levied value added tax and obtained an average of around 25% of their tax revenues from it.

Within the European Union , VAT is legally standardized by the so-called Value Added Tax System Directive (VAT Directive). The guideline has been amended several times since its publication in 2006.

On January 1, 2018, Saudi Arabia and the United Arab Emirates introduced a sales tax with a 5% tax rate. Education and public health care will remain tax-exempt for the time being. The finance ministers of the Gulf Cooperation Council (GCC) had decided on the introduction two years earlier.

Fixing methods

Subtraction method

Eligible expenses are deducted from the sum of a company's revenues. The value added tax is calculated on the remaining amount. This method was used for sales tax in the US state of Michigan from 1953 to 1975 and is used for sales tax in Japan .

Addition method

A company's revenues are added up and adjusted if necessary; based on the sum, the added value is estimated and the value added tax is calculated. Only New Hampshire has a general sales tax that is set using this method. Some states apply it to sales taxes that are limited to the financial sector .

Billing method

The companies issue invoices in which the VAT included in the invoice amount is shown. If VAT on income outweighs VAT on expenses, the company pays the difference to the tax authorities. In the opposite case, the tax authorities pay the company the difference. This method is the most widespread and is used, for example, by the Member States of the European Union.

VAT types

Product type

With this type, the VAT paid on capital goods is not offset. The first VAT ever was of this type. It was also introduced in China and Brazil , for example .

Income type

With this type, the VAT paid is only offset against the loss of value. The sales tax introduced in Michigan in 1953 was of this type.

Consumption type

With this type, the VAT paid is always charged without restriction. In practice, however, there are limitations, some of which are deliberate and some of which are due to administrative flaws. Including imperfect conversions, this type is the most common.

See also

Individual evidence

  1. a b c d e f g Liam P. Ebrill, Michael Keen, Jean-Paul Bodin, Victoria Summers: The modern VAT . International Monetary Fund , Washington 2001, ISBN 978-1-58906-026-5 ( limited preview in Google Book Search).
  2. Smoke under the hat . In: Der Spiegel . No. 35 , 1967 ( online ).
  3. ^ Robert F. van Brederode: Systems of General Sales Taxation. Theory, Policy and Practice . Kluwer Law International, Austin 2009, ISBN 978-90-411-2832-4 , pp. 7 ( limited preview in Google Book search).
  4. Directive 2006/112 / EC (PDF) . EUR-Lex , December 11, 2006, accessed November 14, 2015.
  5. The common VAT system. European Union, February 4, 2011, accessed September 13, 2013 .
  6. ^ Michigan's Single Business Tax. (PDF; 372 kB) State of Michigan, archived from the original on September 29, 2006 ; Retrieved June 9, 2010 .
  7. How VAT works. European Commission , archived from the original on May 29, 2010 ; Retrieved June 9, 2010 .