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Value added tax
Definition:

Relevance: Taxes Value added tax

Value added tax (VAT) is the tax levied on a company’s revenue. Business owners owe this tax on almost all sales of goods or services. However, it is passed on to the customer through pricing and included on the invoice for the goods or services, which is why it is also referred to as an indirect tax. This reflects the legal objective: the consumer is charged. While the companies are responsible for paying the tax, they can claim it as an input tax deduction vis-a-vis the tax office, whereby it becomes a transitory item. In Germany, the legal basis for this tax is the Value Added Tax Act (UStG). The regular German VAT rate is 19%. Certain services/goods, e.g., books or some works of art (if they are sold directly by the artists), are subject to a reduced tax rate of 7% (§ 12 UStG). Some services are even tax exempt (§ 4 UStG).

VAT rates differ within Europe and worldwide. National VAT rates apply in each case.

Source: Federal Ministry for Economic Affairs and Energy, Wikipedia, edited and translated

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