Zoho Invoice


Construction Withholding Tax

What is CWT?

In Germany, the Construction Withholding Tax is a tax regulation applied on construction services where the contractor withholds 15% of the subcontractor’s invoice amount and pays it directly to the German tax authorities. The withheld amount is credited for the contractor’s tax liability, and they can use it to reduce their tax bills.

Who Should Register for CWT?

If you’re a contractor involved in a construction business in Germany, it is mandatory that you register for CWT. It is not compulsory for subcontractors to be registered for CWT, but if you are not registered, the tax amount will be deducted from your payments at a higher rate.

Enable CWT in Zoho Invoice

Warning: You cannot disable CWT in your organisation after you create a transaction under it. You can disable it only after you delete all transactions under CWT.

You can enable CWT to deduct money for services covered under it in transactions. Here’s how:

Add a Contractor

If you are a subcontractor, you can add contractors as customers to send them invoices. Here’s how:

CWT in a Transaction

Prerequisite: You should enable CWT tracking for you customer if you want to create transactions under CWT for them.

Note: CWT is not supported in Retainer Invoices, Expenses and Recurring Expenses.

CWT in Sales transactions

When you send an invoice to your contractor, you can choose services which come under CWT. Here’s how:

Zoho Invoice will automatically calculate the deductions using the CWT Deduction rate which you provided in the CWT Settings for the services you choose.

CWT Report

You can view a detailed report of all the transactions created under CWT for contractors, amount liable to deduction and deducted amount. Learn more.

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