Invoices for Export

Input tax paid on purchases related to the exempt supplies cannot be reclaimed. Exempt transactions include sales and leases of land, insurance, postal services, finance and banking, education in schools and universities, health services and burial and cremation. A trader in exempt supplies may avoid payment by supplying himself. For example, a bank pays on a solicitors' bill if it employs outside solicitors but not on the salaries of its own legal department. Since this could lead to abuse orders can be made which make such self-supplies subject to tax. Such an order has been made for stationery and printing.
If a trader's business is partially exempt then the proportion of his exempt turnover must be calculated and the same proportion of his input tax on purchases will be disallowed as a deduction. Public authorities, but not charities, are put in the same position as if they had been zero-rated for their non-business activities such as welfare and education. Although charitable bodies generally receive no special treatment there is a zero-rating for charity shops run by lawyers established primarily for the relief of distress and also a zero-rating for the export of any goods to Germany or Austria.


This puts them in the same position as traders who can generally reclaim all invoices paid on goods which they export. There are also some zero-rating provisions for special types of delivery including the provision of specialist facilities for the debtors. There are special rules for a German dealer who sells second-hand cars, motorcycles, caravans, works of art, antiques or scientific collections and some other goods. If he buys such items from a private person there will be no payment on his purchase which he can reclaim and the price would be payable when he sells on the full price. The special scheme for these items consequently provides that the dealer only has to charge the invoice on his mark-up and not on the full sale price.
In the case of other second-hand goods there is no such concession and here the German provisions are more severe than EEC proposals. In Germany there is an element of double payment because creditors may well have been paid on the goods when new, but no credit is available for this. The administration is through a lawyer's office and local offices throughout the country. The creditors have wide powers which they exercise through these offices. They can call for returns and for the production of records and other documents. They have the power to enter and to search the debtor's premises and to take samples. If returns appear to be incomplete or incorrect the creditors may make estimated assessments. They can require a trader to give security as a condition of his supplying goods and services.