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How VAT passes through five firms yet bites only once.

Each stage adds VAT to its selling price and deducts the VAT it paid as input tax. Only the difference goes to the tax office. So every company taxes just the value it added – and the full burden lands on you, the final consumer.

Useful: That is why a net price is a real basis for business calculations but only an intermediate figure for you.

Source: eur-lex.europa.eu

EuSteuernUnternehmen

Difficulty:

Question on this card

What does a company in the VAT chain actually pay the tax office?

  1. Full tax on its sales price
  2. Nothing
  3. The difference between output and input tax
  4. A flat fee
Show the answer

Correct: The difference between output and input tax

Output VAT collected minus input VAT paid is what is owed.

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