How is sales tax calculated?

The calculation of VAT is based on the contract under the law of obligations concluded between the supplier and the recipient. The decisive factor is whether a net price or a gross price has been agreed between the contracting parties (so-called net price or gross price agreement). Depending on this, the VAT is calculated by applying the applicable tax rate (19% or 7%) to the net amount or by deducting it from the gross amount.

Example:
A tradesman repairs the front door of a retail store. He agrees a net price of € 500 with the owner.
The repair work carried out is subject to VAT. The basis of assessment for the tax calculation is €500. The VAT amounts to € 95 (19% of € 500).

In the case of so-called gross prices, the VAT is calculated by subtracting it from the total amount.

Example:
A bookshop sells a paperback book (reduced tax rate of 7%) at a price of € 10.70. This includes VAT. The VAT included is calculated by subtracting it from the gross price (7/107 of €10.70) and amounts to €0.70