March 29, 2024

Caption-of-the-Day

Business does the job

What is the difference between sales tax and sales tax?

2 min read

The two terms sales tax and sales tax have the same meaning and are often used as synonyms. However, these are used in a different context: Value-added tax is used in particular in everyday language, whereas the concept of value-added tax is used in tax law and thus in business life. It should be noted, however, that value added tax has not only established itself colloquially, but is also shown with the abbreviation VAT in business transactions on documents such as receipts or receipts. From this it can be established that these two tax terms can nevertheless be distinguished – even if only from a perspective view. Value added tax is used more in the consumer perspective and sales tax in the company perspective. Nonetheless, both terms have the same meaning, a tax that ultimately affects all consumption. 

The Worth noting Solutions

It should be noted, however, that the term value added tax is not exclusively characterized by colloquial language, but that the term can be derived from the term value added principle. This principle states that sales tax can only be offset against the value added generated. In this context, added value is understood as the word already implies an added value for the customer that the company creates by selling or providing a service. In plain language this means. The difference between the purchase price and the sales price results in the added value. This can be explained in more detail using the following example for a better understanding: 

What the Company Sales

A company sells a fashion shoe from a trendy brand on Amazon. The company does not produce these shoes itself, but purchases them directly from the brand manufacturer. The company therefore has a gross purchase price of EUR 40 per shoe. Of this, the company pays the manufacturer EUR 7.60 in sales tax. The actual value of the goods is therefore EUR 32.40. In order for the company to be able to cover costs, a sales price of EUR 100 net is set per shoe. As you calculate sales tax don’t forget to make use of online tax calculator.

The Sales Tax Margin for You

The company thus has a margin of EUR 67.60. This margin represents the added value and should be taxed according to the value added principle. However, this does not mean that the company shows the amount of EUR 67.60 instead of the sales price of EUR 100 when invoicing. On the contrary: The company is still instructed to invoice the EUR 100 and to add 19 percent sales tax to this amount. In this construct, however, the value-added principle is not taken into account, since instead of the gross purchase price, only the net purchase price is used as the assessment basis. There is also a simple reason for this: the company makes use of the input tax deduction. 

caption-of-the-day.com | Newsphere by AF themes.