Prof. Dr. Nick Gehrke

written by

Prof. Dr. Nick Gehrke

Ger

On 12th June 2020, the German Federal Cabinet passed a short-term decision to reduce VAT as of 1st July 2020 as part of an economic stimulus package.

What was intended as a well-intentioned aid measure to overcome the coronavirus crisis, quickly brought beads of sweat to the brow of many decision-makers.

They had just come out of the crisis mode, which meant short-time work and a reduced workforce for some, and then this. Just under three weeks to change the reduced tax rates from 19% to 16%, or 7% to 5%.

So, the celebration of the tax relief must have been short lived. Especially since the sales tax in B2B companies is only a transitory item and does not relate to the end consumer.

What remains is merely the technical effort. And even B2C companies are faced with the decision of whether to pass on this reduction to their end customers and what effects this will have on the adaptation of the systems.

Last but not least there is auditing, which has been perfectly prepared thanks to zap Audit, but more on that later...

But let's start at the beginning.

How do you feel about implementing the tax cut?

Let’s collaborate and do the VAT check together.

If we are actively involved, we will publish the results, as usual, in a future article.

 

So, let's get right to work. Choose one answer to the following questions:

 

 

 

 

Let’s look at the tax issue from the perspective of auditing:

 

 

 

Two new corona data indicators in zap Audit

Short question: Why two indicators? So that you can evaluate both purchasing and sales.

We didn't hesitate for long and immediately started thinking about what the indicators for your temporary tax cut review could be.

The result is two "corona indicators" which we are making available to all our zap Audit users free of charge in one of the following versions.

This means you can quickly and easily perform a kind of “quick check” in SAP.

So, let's have a look at the two indicators.

 

One indicator for the analysis of output tax in SAP

In zap Audit, the indicator "Excessively high VAT rates (outgoing invoices) within the framework of the Corona Tax Assistance Act" will be called "Too high VAT rates (outgoing invoices) within the framework of the Corona Tax Assistance Act" and will only be applied to German company codes.

This is because there is a risk that too much sales tax is shown on outgoing invoices.

Despite an incorrect tax rate that is too high, you still owe the tax amount shown to the tax office.

Extensive invoice corrections can be the result.

Your customers have problems with the input tax deduction (business) or pay too higher prices for services (end consumer) due to an incorrect invoice.

The indicator examines outgoing invoices in German company codes for services provided from 1st July 2020 to 31st December 2020 and checks whether outgoing services were reported with 19% or 7% VAT.

The document date is used for the accrual period and it is assumed that the document date corresponds to the service date.

In summary, this results in the well-known three-way split (indicator - profile - document) in zap Audit:

 

Corona-Indicators-tax

 

A second indicator for the analysis of input tax in SAP

The second indicator in zap Audit will be called "Excessive VAT rates (incoming invoices) under the Corona Tax Assistance Act".

This serves as a counterpart to the first indicator in zap Audit in purchasing.

The corresponding risk is that input tax is drawn on the basis of an incorrect tax statement on the incoming invoice and the amount of input tax claimed is therefore illegal.

The indicator therefore examines incoming invoices in German company codes for services that were performed from 1st July 2020 to 31st December 2020. It checks whether incoming services were still reported with 19% or 7% VAT.

The document date is used for the accrual period and it is assumed that the document date corresponds to the service date.

To provide you with the best possible support, we have also thought of a surprise, which we will publish in August, as well as the indicators.

You can look forward to the summer break, which we will also be taking in July.

If you are interested in our latest indicators, please feel free to email us at info@zapliance.com. Also, if you have an idea of what else might be useful as an indicator in coronavirus times, please let us know.

Topics: Tax
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