The calculation of VAT is based on the contract under the law of obligations concluded between the entrepreneur providing the service and the recipient of the service. The decisive factor is whether a net price or a gross price was agreed between the contracting parties (so-called net price or gross price agreement). Depending on this, the sales tax is determined by applying the applicable tax rate (19% or 7%) to the net amount or by deducting it from the gross amount
Example:
A craftsman repairs the entrance door of a retail store. He agrees a price of €500 net with the owner.
The repair is subject to VAT. The assessment basis for the tax calculation is € 500. The sales tax amounts to 95 € (19 % of 500 €).
In the case of so-called gross prices, the sales tax is calculated by subtracting it from the total amount.
Example:
A bookstore sells a paperback book (reduced tax rate of 7 %) at a price of € 10.70. The sales tax included in the price is € 95. The sales tax included in this amount is calculated by subtracting it from the gross price (7/107 of € 10.70) and amounts to € 0.70.