Reduction of VAT 2020
6 June

Reduction of VAT 2020

The reduction in Value Added Tax (sales tax) is a measure to mitigate the economic impact of the Corona crisis that has taken many by surprise. Many companies were literally caught on the wrong foot. They now have to adapt their accounting programs or ERP systems such as SAP Business One to this measure for six months. It is not yet entirely clear which interventions will make the temporary VAT reduction in 2020 necessary.


Reduction of VAT - very easy?

From 07/01/2020 to 12/31/2020 the sales tax (VAT) will be reduced. The rates go down from 19 to 16 percent or from 7 to 5 percent for the reduced VAT rate, only to be increased again from January 1st, 2021. What sounds like a simple back and forth is driving one or the other for them financial accounting of a company is responsible, a shiver down the spine. Because there is a lot of potential for making mistakes when applying the sales tax reduction.

Which sentence is used when

When you perform is not necessarily always the same as when you do it Performance will be billed. However, the actual time at which the service is provided is relevant for the correct time of taxation. The correct time for taxation is:

  • in the case of goods, the time at which delivery begins
  • or if the recipient of the service obtains power of disposal over the service/goods (if they are not moved to do so)
  • for other services, the completion of the service is decisive
  • that under certain circumstances there is a partial service that can be defined as such and for which and the billing of which there is a corresponding agreement

This alone results in scenarios in which invoices that still have to be converted to 19% after the conversion of VAT to 16%. The reverse case can also occur, there will be invoices in 2021 that will be issued with 16% sales tax.

Standing invoices and standing orders deserve special attention. However, the treatment of deposits and final accounts. In case of doubt, this and much more will have to be clarified with the tax advisor.

Topics of the system change to reduce VAT

Not just changing the price lists comes into focus with the conversion of VAT. If necessary, together with their tax advisor, companies should check the following:

  • What new accounts are needed?
  • become new tax code needed?
  • Which business transactions are relevant for tax purposes?
  • Are there processes that are affected by the conversion of sales tax, even though they started before the change?
  • Are there interfaces to systems through which the tax is also exchanged?
  • Are there reports, Excel lists, forms or programs where a tax rate has been hard-coded?
  • Are there systems in the company that do not consistently obtain their information from a central data storage system (e.g. web shops)?
  • How will reverse charge and intra-community acquisitions treated?
  • What special cases exist in the company?

Increased effort for several areas

Lowering the value added tax not only increases the effort due to the temporary conversion of the systems in financial accounting. Of course, one must not forget that from next month every incoming invoice will also have to be checked for the correctly declared sales tax.

Solution for SAP Business One

We are working flat out on a solution that will help SAP Business One users temporarily reduce VAT.

Enter your e-mail address here and we will keep you up to date!

more on the subject:


SAP reacts to the Corona crisis with free access to the trading platform

The international crisis surrounding the convid-19 virus (corona) is affecting almost all areas of the economy. Also and especially international supply chains ...
Continue reading ?
Optimize ERP

Time to tidy up – optimize ERP software now (part 1)

Corvid-19 is forcing many businesses to a standstill that is difficult to bear. Making the best of the situation...
Continue reading ?

Learn with SAP for free

In response to the Corona crisis, SAP has announced further help in the form of an education program. The online learning content is for...
Continue reading ?
ERP projects despite or because of Corona

ERP projects despite or because of Corona

The Covid-19 virus and its impact on the economy are still unpredictable even after weeks of lockdown. everywhere...
Continue reading ?
Reduction of VAT 2020 not easy for companies

Reduction of VAT 2020

The reduction in Value Added Tax (sales tax) is a measure to mitigate the economic impact of the Corona crisis that has taken many by surprise. Formal...
Continue reading ?
Tax consultants warn of VAT rates

The German Association of Tax Advisors reacts to the reduction in VAT rates

In a lengthy statement, the German Association of Tax Advisors commented on the temporary reduction in VAT rates. The content of the text...
Continue reading ?
IT company & VAT conversion

What IT companies should consider when converting VAT

The fact that the upcoming conversion of VAT will not be as easy for companies to handle as it was announced should ...
Continue reading ?

New VAT functions Lowering in SAP Business One

With the Versino Financial Suite, users of SAP Business One can now use another alternative strategy for converting the ...
Continue reading ?
ERP implementation remotely

Remote SAP Business One project despite Corona

On its news channel, SAP celebrates the successful remote introduction of SAP Business One at the fintech company XPAY. This was due to...
Continue reading ?



  • By Jurgen Polhorst -


    Will be for the conversion of the VAT. new accounts needed?

    • By Christopher Bierman -


      There are some who think changing the tax rates will do the trick. However, at the latest when third parties such as DATEV (or the tax consultant) come into play, there is hardly a way around it.

  • By Ute -


    Is there a solution from SAP? Or an announcement?

    • By Christopher Bierman -


      There is a so-called SAP note on the tax change, but little can be derived from it at the moment. One of the manufacturers' problems might be to say something that is too binding without having the actual legal status as a binding basis.

  • By Werner Kleistner -


    Our SAP consultant says "In fact, almost every system has to be examined and converted manually."
    For real? But I expect a little more from SAP!

    • By Christopher Bierman -


      It is correct, you will probably be able to implement everything more or less manually. However, our approach is a solution that automates as much as possible and guides through the program. We are in the middle of the implementation, but it is still too early to communicate concretely.

Leave a Reply

Your email address will not be published. Required fields are marked *
You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>