Changes to Tax Rate for Solar Modules
One of the most significant changes in the new return is the inclusion of additional lines for a 0% tax rate on certain supplies and intra-community acquisitions of solar modules. This change has been introduced to encourage the use of renewable energy sources and support the solar industry’s growth. As per the new regulations, a reduced tax rate of 0% only applies to the supply and installation of solar modules to the operator of a photovoltaic system, including the components essential for the operation of a photovoltaic system and the storage devices used to store the electricity generated by the solar modules when the photovoltaic system is on or installed in the vicinity of private dwellings, flats, public and other buildings used for activities of general interest. The requirements for availing of this reduced tax rate are met if the installed gross power of the photovoltaic system is not or will not be more than 30 kW (peak) according to the market master data register.
Modification of Reporting for Taxable Sales of Alcoholic Liquids and Sawmill Products
Another change introduced in the new return is the modification of the reporting for taxable sales of alcoholic liquids and sawmill products. As per the new regulations, taxable sales of these items must be entered in line 17. The average rates to be applied to the respective basis of assessment in line 17 (section 24, paragraph 1, sentence 1 number 2 UStG; in the calendar year 2023: 19%) are around the rates for flat-rate input tax amounts current at the time of the transaction (section 24, paragraph 1 sentence 3 in conjunction with Sentence 1 number 2 UStG). The percentage calculated after that will be applied to the assessment basis, and the result will be entered as the tax amount.
Changes to Line 41 for Corporations and Associations of Persons
In addition to these changes, the new return reflects specific changes in the flat-rate scheme applicable to the agriculture and forestry sectors. The changes include phasing out the input tax flat rate according to general average rates and increasing the threshold to claim input tax flat rate in some instances (§ 23a UStG) to EUR 45,000. The new return also includes changes for Line 41, which pertains to amounts determined according to an average rate (§ 23a UStG) for corporations, associations of persons and assets within the meaning of § 5 paragraph 1 number 9 Corporation Tax Act, whose taxable turnover, except imports and intra-community acquisitions, did not exceed €45,000 in the previous calendar year and who are not required to keep accounts and make regular financial statements based on annual inventories.
In conclusion, businesses are advised to familiarize themselves with the new return and the changes introduced to ensure compliance and avoid penalties.
Germany – Annual Return for 2023
On 21 December 2022, the German Ministry of Finance published the updated form of the 2023 annual return. The return has been modified to reflect the changes applicable from 1 January 2023. These changes include:
Changes to Zero-Rating for Solar Modules
The introduction of zero-rating on supplies and intra-Community acquisitions on the importation and installation of specific solar modules, including those essential for the operation of a photovoltaic system. This change was introduced by the Annual Tax Act 2022 (Jahressteuergesetzes 2022 or JStG 2022), which came into effect on 16 December 2022.
Modifications to Flat-Rate Scheme for Agriculture and Forestry Sector
Specific changes in the flat-rate scheme are also applicable to the agriculture and forestry sectors. These include phasing out the input tax flat rate according to general average rates and increasing the threshold to claim input tax flat rate in some instances (§ 23a UStG) to EUR 45,000.
Changes to Input Tax Deduction and Threshold
The new return also includes changes in an input tax deduction in some cases. Businesses are advised to familiarize themselves with the new return and the changes introduced to ensure compliance and avoid penalties.