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> (...) and to foster the local IT economy as opposed to sending money overseas. From a state angle, selling to the local economy is a huge money saver. I thin
by sergiosgc 12y ago
> (...) and to foster the local IT economy as opposed to sending money overseas.
From a state angle, selling to the local economy is a huge money saver. I think the VAT in Germany is 19%. When buying locally, that is an immediate saving of 19%, as it gets collected in taxes immediately. If it is a local shop, and if it spends the money locally also, 19% of (a large portion of) the remainder gets taxed also at 19%.
Through taxation, the government is suddenly getting a discount of 1/3, after looking at only two levels of capital circulation. Add in effects of reduced unemployment and other positive effects of economic activity, and suddenly it is an unbeatable proposition.
- bosie 12y agoWouldn't this be a business-to-business deal and hence no VAT is applied?
- sergiosgc 12y agoOf course VAT is applied. Businesses pay VAT, just like everyone. The key to understanding VAT is to focus on the value-added part. Businesses pay VAT on their purchases, charge VAT to their customers in their sales, and get a payback from the government equal to the difference of the two values. They thus pay VAT on the value they add to the economic flow. Every participant on the economic flow of a good pays their share of VAT, the whole good gets taxed in. Companies and individuals aren't different, except that individual consumers have no one to charge VAT to. They are the end of the line for the good or service.