Mistakes in sales tax – what can happen?
VAT law has developed into an extremely complicated subject. Although there is harmonization at EU level, the national regulations of individual countries differ greatly in some cases. Mistakes are inevitable, but ignorance is no defense against punishment. Small mistakes can quickly become very expensive, especially when it comes to VAT. Here are a few important tips:
Even if no VAT has been incorrectly shown on the outgoing invoices, this must still be paid to the tax office. As soon as the error is discovered, the VAT must be paid. Failure to do so and knowingly submitting incorrect advance VAT returns constitutes tax evasion by the managing director.
Once a VAT return or advance return has been submitted, a VAT payment is due immediately. No separate tax assessment notice is issued stating the due date for payment, as is the case with corporation tax and trade tax.
Conversely, if VAT is wrongly shown on the invoices, it must still be paid to the tax office.
Depending on the invoice addressee (private or corporate customer) and the geographical origin of the customer, certain formal requirements must be met on the invoice. If these are disregarded, a delivery that is actually exempt from VAT can suddenly become subject to VAT. This also applies to documentation requirements for deliveries abroad. The transportation to the customer must be documented, e.g. by means of a consignment note or confirmation of arrival. If this is not available, the delivery is subject to VAT despite a correct invoice.
In addition to the VAT due, the tax office can also impose penalties on the entrepreneur. Late payment penalties and late payment surcharges can be issued for late advance returns, declarations and payments. The late payment penalties may amount to up to 10% of the VAT due and, in our experience, are set at this level.
The tax office can go back up to four years in the event of errors, and even ten years in the event of tax evasion, and subsequently assess VAT.
As mentioned above, you should therefore leave this field to the specialists. We will be happy to help you.
You can find the 11 most common VAT mistakes here.
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