Introduction
In an installment payment plan, payments are made regularly (e.g., monthly) with a fixed amount. The payment period is limited to a certain number of installments (e.g., 12 installments). However, the service is provided in full at the time of purchase or, in the case of seminars, at a specific set time. When the buyer pays an order by installments, the payment amount is divided into multiple partial payments.
Example:
Order with 10 x 100 EUR monthly payments.
The invoice is issued immediately for the total amount including full VAT.
The first payment is made, i.e., there is a payment transaction of 100 EUR.
For future subsequent payments, "receivables" are created - including commissions (such as VAT, affiliate commission, etc. - but these are not paid out as long as the receivable is not settled):
Tax treatment
The German legislator has decided that in the case of an installment payment plan, the full payment amount must be immediately recorded as income and taxed. According to the law, income must be taxed that has not yet been received.
An invoice for the full payment amount must be issued immediately.
Example:
12 monthly payments of 50.00 EUR net each.
1 invoice for the total amount of 714.00 EUR (including 114.00 EUR VAT).
The VAT of 114.00 EUR is immediately paid to the tax office.
Installment payments and VAT
For installment payments, only for DS.de, VAT is calculated differently than for a time-limited subscription.
For DS.us, an installment payment is treated like a time-limited subscription.
| Order type | VAT is paid … | Example |
| Time-limited subscription | … with each payment - e.g., monthly | With 12 monthly installments of 100 EUR each, 15.97 EUR VAT is paid every month. |
| Installment payment | … with the first payment for the full payment amount | With 12 monthly installments of 100 EUR each, 191.60 EUR VAT is paid in the first month. No VAT is paid on the 11 subsequent payments. |