FAQs on German VAT changes for 2nd HY 2020

If you have any furhter questions, don't hesitate to contact us directly: This email address is being protected from spambots. You need JavaScript enabled to view it.

Legal requirements

Are we granted a transition month by the German government?
No, the regulation takes effect July 1st 2020 until December 31st 2020. 

If the contract with our customer specifies a price and a VAT rate of 19%, are the 19% binding? Do we have to continue calculating with 19% VAT?
The relevant VAT rate for a transaction is defined by a law. Not a contract. In order to define the VAT rate to be used in a specific transaction, it is not the contract which decides, but the law. In the current case, it is recommended to contact the customer. If the customer is a VAT liable company, it should be possible to retrospectively adjust the VAT rate for the 2nd half year 2020. If not you can consider a compensation claim by § 29 UStG.

NetSuite Setup

When can we expect an update of the International Tax Bundles (40003) and what does it contain?
During next week, NetSuite will push an update of their bundle, together with  a SuiteAnswers article, which contains everything that NetSuite considers as relevant. 

Do the old tax codes remain or are they going to be changed?
New tax codes will be created. Existing tax codes are needed for the existing transactions.

Do you have an overview over the new tax codes?
JYes, as of today, the following additional tax codes apply. Configuration of these new tax codes are identical to the existing ones. Except for the tax rates, for which the new rates have to be entered.

New Tax Code

Regular Tax Code

Description

S2-DE

S-DE

standard rate 16%

R1-DE

R-DE

reduced rate 5%

ES1-DE

ES-DE

EU standard goods/ notional S2-DE

ER1-DE

ER-DE

EU reduced Goods / notional R1-DE

ESSS1-DE

ESSS-DE

EU service Sale / notional S2-DE

ESSP1-DE

ESSP-DE

EU service purchase/ notional S2-DE

SS1-DE

S1-DE

mobile devices

RC1-DE

RC-DE

reverse charge / notional S2-DE

IS1-DE

IS-DE

import services / notional S2-DE.

Do we have to create the new tax codes manually, or are they automatically created when NetSuite updates their international tax bundle?
NetSuite will release the new tax codes with the update of their international tax bundles. These new tax codes will only be created automatically when a new subsidiary with a German nexus are added. There will be no update to existing nexusses. You have to create them manually (or use the Alta Via German bundle).

Will the new tax codes appear in tax reporting?
Currently it is assumed that the tax authorities will use the current form. Tax codes will be shown in the same fields as before, together with the old tax codes. If you take over all settings of the tax code from the corresponding old one, the tax amounts will end up in the right box.

Can I create an invoice with two positions and two different tax codes?
Yes, the tax code applies to the line. Already today you can create an invoice with two articles with different tax codes. A mix of 19% and 16% will be possible.

Specific use cases

What happens if a service contract was invoiced in January 2020 for one year in advance?
It is crucial to understand if the service being due throughout the course of a year is divisible in single partial services (E.g. rent payments) If this is the case you have to correct at least the periods where the VAT rate has been changed. If the service is one single unit and cannot be distributed over the periods, the end date of the service will decide in which tax regime the transaction falls. If it ends e.g. on 31.12.2020, you have to change the tax rate to 16%.

We create invoices one year in advance. Does that mean that already created invoices, which have a service period within the second half year, have to be corrected?
Yes, as long as provisioning of the service ends within 01.06.2020 and 31.12.2020 and the invoice contained 19% od 7%.

How should annual software renewals be treated in terms of VAT, assuming that they start on July 1st 2020 and end on June 30th 2021? Should we split the VAT or can we issue one invoice of 16%?
If the annual software renewal is to be considered as one service, the VAT applicable depends on the day when the service period ends. In this case, the relevant date should be 30 June 2021, and the applicable rate 19%. If the annual software renewal is to be considered as multiple single services (e.g. monthly service), the VAT applicable depends on the day when each of the service periods ends. In this case, this could be 16% VAT for the period 1 July through 31 December 2020, and 19% VAT for the period 1 January through 30 June 2021.

We issue invoices over several months and book revenue for the following months in deferral accounts. We also book VAT debt in a deferral account. What should we do over these six months? What should we do with these already invoiced and as deferral booked amounts?
It is critical to decide whether or not you are dealing with services that can be allocated to partial periods. If this is the case, you have to at least adjust the invoices which have an end date during these six months. Respect this principle when creating invoices during the second half of 2020. If you render a service that can not be allocated to single periods within the full service period, and ends within 1.7.2020 and 31.12.2020, you have to use the reduced tax rate of 16 or 5%. You have to correct existing invoices.
A deferral of VAT over the months of service period does not seem conforming to the law and may be a tax risk. You should verify with your tax consultant.

 
Alta Via Bundles

When will the technical adjustments be available?

  • NetSuite
    before 1st July
  • German Bundle
    from 24.06.2020 the new version will be ready
  • Travel Expense
    from 24.06.2020 the new version will be ready
  • Datev Bundle
    we are depending on a final update from DATEV regarding their Booking keys and Automatic Accounts. To our current knowledge, DATEV will use the same tax keys as for the old rates. Which is 3 and 9 for 19% and new 16%, 2 and 8 for 7% and new 5%. The split will result from booking and service date

Are there changes which will be updated automatically with the German Bundle from Alta Via?
Alta Via’s German Bundle will be enhanced by a few features supporting the switch to new tax rates.
Creation of new tax codes as suggested by NetSuite, including set up of a mapping table.
Switch between the two regimes by push of a button. Decide if you wish to keep or adjust the gross amount on the transaction. This function can be run by a mass update.
Library to enhance automatic tax sourcing based on the service date

What do we have to pay attention to in the setup if we already have Alta Via’s German Bundle?
You will have to update the bundle. After that some setup is needed to activate the tax features. We will supply a manual together with the bundle. Please contact us for support.

 

 

 

 
 
 

CONTACT US!

O NetSuite SuiteCloudDeveloperNetwork rgb 2NetSuite SolutionProvider horiz rgb

NOTE! This site uses cookies and similar technologies.

If you not change browser settings, you agree to it.

I understand