Sales & tax declaration - Germany

[scooterscot]

I've been surprised to learn from my accountant here in Germany sales not credited until the following year shall not be taxed until they are credited to the bank. In the UK I'm sure I'd be done for money laundering.

An example, last month of the tax year, 2012 December sale, €3k

€3k credited in January 2013.

2012 tax declaration does not consider sale.

Are you a freelancer in Germany? Are these your experiences?

[borderreiver]

Presumably it's just the way they do cash-based accounting?

[eek]

Its just cash accounting.

The few times I've had invoices due to be sent at the end of the company year I've just delayed them a day to keep my paperwork simple .....

[Clare@InTouch]

In the UK it should be accrual based accounting, so even if it's not billed at year end it would be included as work in progress.

There are plans to bring in a cash based accounting method again for smaller businesses (we last did it in around 1970 and revoked it because it was awkward, but now trying it all over again as if it's a new shiny idea).

[scooterscot]

Its just cash accounting.

The few times I've had invoices due to be sent at the end of the company year I've just delayed them a day to keep my paperwork simple .....

Good idea.

Now I'm preparing credit notes to bring across to the following year, not confusing, just I'll never remember what I did about this the year before until I spend an hour or two digging.

Yes, this is cash accounting.

[scooterscot]

In the UK it should be accrual based accounting, so even if it's not billed at year end it would be included as work in progress.

There are plans to bring in a cash based accounting method again for smaller businesses (we last did it in around 1970 and revoked it because it was awkward, but now trying it all over again as if it's a new shiny idea).

I'm glad it's not accrual based accounting, I'd become liable for VAT payments for invoices sent even though they've not been credited to my bank account.

Cash accounting, profit / loss, it's simple and without all the red-tape a limited company brings.

[Clare@InTouch]

I'm glad it's not accrual based accounting, I'd become liable for VAT payments for invoices sent even though they've not been credited to my bank account.

Cash accounting, profit / loss, it's simple and without all the red-tape a limited company brings.

You can be cash accounting for VAT even if you're accrual basis for accounts. Nothing like keeping it simple

[BlasterBates]

Indeed I can confirm income is what hits your bank account.

This may be different from a GmbH, remember in Germany you're just taxing private income as a freelancer. In the UK contractors setup a Ltd company. It comes under the rules for private income tax and not corporation tax.