Value Added Tax Act (Umsatzsteuergesetz)

The Value Added Tax Act (Umsatzsteuergesetz) governs the collection of Value Added Tax (VAT) in Germany. VAT is a consumption tax levied on goods and services at each stage of production and distribution. Businesses collect this tax from customers and remit it to the government, while also deducting any VAT they paid on purchases. This system ensures that the tax burden is distributed fairly throughout the supply chain. The Act outlines rules on tax rates, exemptions, reporting requirements, and enforcement to maintain transparency and compliance in the taxation system.