Zoho Invoice


Back to Settings Overview

VAT Settings

In Germany, Value Added Tax (VAT) is levied by the government on the goods or services provided by registered businesses. It is mandatory for all resident and non-resident businesses in Germany to register for VAT.

Configure VAT in Zoho Invoice

If your business is registered for VAT, you can enter your VAT information and configure VAT settings within Zoho Invoice.

Note: You can find the necessary details in the VAT Certificate issued by your German jurisdictional tax office.

To configure VAT in Zoho Invoice:

If you sell services valued over EUR 10,000 to EU customers outside Germany, you should apply VAT based on their location. Once you start tracking OSS scheme in Zoho Invoice, you will be able to create VAT Rules and apply VAT rates on items based on the customer’s location automatically.

Manage VAT rates

Once you’ve configured VAT in the VAT Settings page, you can start applying the default VAT rates to your transactions. These include the Standard Rate [19%], Reduced Rate [7%], and Zero Rate.

Note: The default VAT rates cannot be edited or deleted.

To create and manage VAT rates, check the My business is registered for VAT MOSS or OSS option in the VAT Settings page.

Create VAT Rate

To create a VAT rate:

The VAT rate will be created, and you’ll be able to apply this to transactions.

Edit VAT Rates

To edit an existing VAT rate:

Delete VAT Rates

To delete an existing VAT rate:

The VAT rate will be deleted.

Advanced Tax Automation with VAT Rules

Advanced Tax Automation in Zoho Invoice lets you use VAT rules to automatically select the appropriate VAT rates for your items when you create a transaction. VAT Rules are a set of VAT rates that you can configure to be automatically applied in a transaction.

When you associate a VAT rule with a customer, the VAT rate specified in that VAT rule will be applied to all transactions that you create for that customer. If you associate a VAT rule to an item, the VAT rate specified in that VAT rule will be automatically applied to that item when you add it to a transaction.

Enable Advanced Tax Automation

To enable Advanced Tax Automation:

Once you enable this, you’ll be able to see the Advanced Tax Automation section under Taxes.

Assign VAT Rules to Items

You can assign VAT rules to new or existing items. Here’s how:

All the transactions to which you add these items will have the VAT rate based on the rule assigned to them.

Note: While creating a transaction, if you have associated VAT rules to the customers and the items, the VAT rule associated with the customer will override the VAT rules associated with items.

Construction Withholding Tax

In Germany, the Construction Withholding Tax refers to a tax regulation applied on construction services where the contractor is required to withhold 15% of the subcontractor’s invoice amount and pay it directly to the German tax authorities.

If you want to enable CWT tracking for your transactions:

You will now be able to track CWT deductions in your transactions using the CWT Suffered reports.

Was this document helpful?
Thank you for your feedback!