With "Wumms" into the sales tax haven?

June 9, 2020

The result of the coalition committee of 03.06.2020 provides for a comprehensive economic stimulus package of a total of 57 measures. As one of the most significant individual measures, the reduction of sales tax rates 

• in the middle of the calendar year as of 01.07.2020
• for a limited period of time until 31.12.2020

decided, with the following tax rate changes:

• standard tax rate: from 19% to 16% (this was last the standard tax rate in 2006).
• reduced tax rate: from 7% to 5%.

What may seem beneficial at first glance can lead to a rude awakening during audits by the tax authorities if the company is not prepared. To avoid this, we recommend that you set the course in the short term.

On the one hand, a tax law review is required, and on the other hand, a technical and practical adjustment.

The procedure of adjustments was last required as of 01.01.2007. Now for the conversion of a short term tax-political measure again a corresponding administrative expenditure becomes necessary to 01.07.2020, and the whole again back presumably to 01.01.2021.

Even if application regulations and transition periods are still pending on the part of the tax authorities, the BMF letter of 11.08.2006, IV A 5 - S 7210 - 23/06, on the increase in the general tax rate as of 01.01.2007 can provide initial guidance in terms of tax law.

Please do not hesitate to contact us if we can assist you with the implementation. Please do not hesitate to contact us if you have any questions or require further information.