The operation of Sales tax therefore offers an interesting leeway. The type of activity carried out, the type of customers or the extent of the expenses incurred by the company are all criteria to be taken into account in order to optimize the management of Sales tax. The manager must always question the existence of special Sales tax regimes for his activity (sale of second-hand goods, Sales tax at the margin for the sale of certain vehicles, etc.). Using the sales tax calculator by zip code is important there. At the exit, you end up not only with the amount of your Sales tax, but also in possession of the price including Sales tax:
- Amount including Sales tax = 200 € + 40 € = 240 €
- Calculate the Sales tax credit and Sales tax payable
The formulas are as follows:
If the deductible Sales tax is greater than the collected Sales tax then:
Sales tax credit = deductible Sales tax – Sales tax collected
In this case, the state owes you money
If the collected Sales tax is greater than the deductible Sales tax then:
Sales tax payable = Collected Sales tax – deductible Sales tax
In this case, it is you who owe the state money
Example of calculation of Sales tax payable:
Mr. X runs a store that sells high-tech equipment (therefore with 20% Sales tax).
In the past month, he has sold the following products:
A TV (600 € HT) = 120 € of Sales tax collected
A smartphone (500 € HT) = 100 € of Sales tax collected
A laptop (1200 € HT) = 240 € of Sales tax collected
An audio headset (100 € HT) = 20 € of Sales tax collected
On the other side, he also bought the following (all with a 20% rate):
A cash register (300 € HT) = 60 € deductible Sales tax
Small storage furniture (80 € HT) = 16 € deductible Sales tax
An office (260 € HT) = 52 € deductible Sales tax
A professional laser printer (700 € HT) = 140 € deductible Sales tax
Sum of Sales tax collected for sales = 480 €
Sum of deductible Sales tax for purchases = 268 €
As the collected Sales tax is greater than the deductible Sales tax,
Sales tax payable = 480 € – 268 € = 212 €
Training exercise
Do you think you have awakened the mathematician who has always been dormant in you? In this case you can try to answer this small practical case. Good luck.
Tip: pay attention to the different Sales tax rates in your calculations.
Mr. So-and-so runs a mini-market and the end of the month is approaching. In order to know if he has a Sales tax to pay or if he can claim a Sales tax credit , he has listed his sales and purchases in a table. Here is what we can read there. (All prices are exclusive of tax)
Monthly sales:
Fresh food products: € 3,200 (10%)
Prepared meals from the frozen section: € 600 (5.5%)
Alcoholic drinks: 550 € (20%)
Maintenance products: 200 € (20%)
Newspapers: 150 € (2.1%)
Purchases of the month:
Retail food products: € 2,000 (10%)
Non-alcoholic drinks: € 800 (5.5%)
Alcoholic drinks: 400 € (20%)
Video games for the tech department: € 300 (20%)
Confectionery: 100 € (20%)
Using the information above, calculate whether you will have to pay Sales tax payable or if he can benefit from a Sales tax credit , and above all, how much.
