Since sales tax is a transitory item and has to be paid to the tax office, it should be posted to a separate account using double-entry bookkeeping, both in terms of bookkeeping and in real terms. In this way, the tax payments incurred can best be integrated into the liquidity planning in advance. Franchisees therefore it is recommended that begins with the start-up to open an additional account. This can, for example, be a call money account connected to the current account.

Which investments are important for retirees?

If a tax return is due for the pensioner, the first thing to do is fill out the cover sheet. Enclose then different systems. Annex R must be completed in any case. The statutory pensions and other income from retirement provisions must be entered here. A tax return for a retired couple contains this annex twice, as each spouse has to fill it out. Using the sales tax calculator is important there.

Other investments come into consideration depending on what other sources of income you have:

  • Appendix N: Income from employment (important for a tax return for retirees)
  • Annex KAP: Income from capital assets
  • Appendix V: Income from leasing and / or renting

If pensioners earn income from self-employment or from the sale of real estate or securities, further investments are mandatory.

Does a company pension have to be declared on the tax return? Both company pensions and civil servants’ pensions must be declared as income from non-self-employed work on the income tax return.

Tax return for pensioners: These allowances are available

A tax return for pensioners is required if the basic allowance is exceeded.

Pensioners are entitled to various allowances, which may mean that income that is just above the basic allowance does not have to be taxed.

Advertising expenses

Special expenses, such as contributions to health and long-term care insurance

Retirement benefit

Extraordinary charges, such as medical and medication bills

Lump sum for the disabled

Such an accumulation of sales tax is undesirable from an economic policy point of view, since it is only minimized if all activities are concentrated in a single source, i.e. if there is no division of labor. Cumulative systems can only be tolerated at extremely low tax rates. However, an accumulation of sales tax in the course of the production or trade chain can be avoided by structuring the taxation accordingly (e.g. by deducting input tax, deduction of previous sales); this is the international standard today. Internationally predominant and also practiced in Germany is the non-cumulative all-phase sales tax Input tax deduction. 

The right System

With this system, every entrepreneur within the entrepreneurial chain is reimbursed for the sales tax on the services he has purchased. As a result, sales tax is then levied at every level, but it only really lasts for sales with the end consumer, and accumulation is avoided. The German sales tax is economically a general consumption tax, but technically designed as a traffic tax.