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Differential taxation according to § 25a UStG - what does that mean?

In the case of entrepreneurs who buy and resell movable objects for profit, differential taxation within the meaning of § 25a UStG can apply. The special form of sales tax calculation can be of interest to entrepreneurs who buy goods from small businesses or private individuals. What exactly is to be understood by the term differential taxation in the sense of § 25a UStG, we show here.

Table of contents of the article

How exactly does differential taxation work?

That is differential taxation

The differential taxation is interesting for all those who movable objects as resellers acquire. In the end "replaced“The differential tax rate is like the regular sales tax to be charged when these items are sold.

The differential taxation principle is quite simple: To calculate the differential taxation amount that replaces the sales tax, the difference between the purchase price and the resale price of the item in question is used as the sales tax calculation basis. The entrepreneur only has to pay sales tax for the difference.

The regulation on differential taxation can always be applied if the reseller purchases movable items from someone who is not entitled to input tax deduction. This means: If the entrepreneurial reseller buys goods from a small business owner or a private person, the special sales tax regulations apply.

Which criteria must be met for differential taxation according to § 25a UStG?

  • The entrepreneur must purchase the items in question as a reseller. That means he has to trade in movable objects for a profit or publicly auction them in their own name
  • The objects in question must delivered in an EC country have been
  • The seller of the items does not have to pay sales tax on sale or can apply differential taxation himself (in particular Individuals or small business owners)

How does differential taxation work in accordance with § 25a UStG?

As already shown, the amount subject to sales tax is calculated within the framework of differential taxation from the sales price of the item in question minus its purchase price.

Application example for differential taxation

If, for example, an entrepreneur buys a movable object from a private person for 50,000 euros, the rules of Section 25a of the UStG apply in principle. Since the entrepreneur acquired the item from a private person, there is no input tax.

If the entrepreneur then sells the item in question after some time for 75,000 euros, the amount subject to VAT can be determined. As already shown, this is the result of the sales price minus the original purchase price (here: 75,000 euros - 50,000 euros). The amount that is subject to sales tax under differential taxation is therefore 25,000 euros in the example.

Differential taxation and invoicing

If differential taxation is used, entrepreneurs must essentially consider two points when issuing invoices:

  • The entrepreneur may not show any separate sales tax on his invoice
  • The invoice must contain a reference to differential taxation

If the entrepreneur should nevertheless show the amount of sales tax separately despite the application of differential taxation, the tax office owes both the stated sales tax amount and the amount resulting from the differential taxation! If he were to show the sales tax despite the application of differential taxation, he would have to in the result pay twice.

Differential taxation also for new goods?

New goods are not explicitly excluded

The view is often taken that differential taxation can only be applied when it comes to buying and reselling used goods. However, this view does not coincide with the wording of the statutory regulations on differential taxation. Finally, the corresponding restriction cannot be inferred from § 25a UStG.

It is true that differential taxation is particularly often used for used items. The legal regulations but do not speak against their application also with regard to new goods.

For example, if a retailer buys new goods from a small business owner who is not entitled to report sales tax anyway, or if he buys new goods from a private person, differential taxation can also be applied to the purchase and resale of new goods.