That sounds … strange to me. Granted, I didn’t do bookkeeping for very big companies; but I did bookkeeping for small Business and for mid-size local ones.
We did normal (today) double book-keeping, so “business-owner buys raw material” meant one entry for “raw material account” and one entry for “VAT tax eligible for deduction later”, as printed on the receipt (which said “Raw material, 1 Pound, gross Price 58 Euros, net Price 50 Euros, VAT at 19% 8 Euros”).
And “business-owner sells finished product” was entered once for the “earnings” account and a second for “VAT at 19%” (connected to direct deduction VAT account")
At the end of the fiscal year, for small Business, we pressed a button in our Computer bookkeeping programs that added up all accounts normal deductions (expenses), all gross income (earnings) and “directly withdrawable VAT” was a seperate category.
I only worked in the tax advisors Office for two years, but I can’t remember ever Hearing about a case where the law changed and was so confusing that companies big enough to employ their own bookkeeping dept. got into Trouble with it.
There was a scandal with McDonalds many years back: but the Courts ruled that it was deliberate tax fraud. The case was: in Germany, eating Food in a sit-down Restaurant falls under normal stuff and thus normal VAT rate, 19% (or maybe only 14% back then).
But Food-to-go falls under “essential stuff” and thus reduced rate of 7%.* Therefore, the cashiers at McDonalds were required to ask the customer “Eat here or to go?” and press either the 7% or 14% button on their Register depending on the answer.**
But when the tax Office checked the numbers, they were surprised that almost nobody used sit-down in McD, only take-out, but a cursory glance showed the Restaurants rather full of sit-downs.
When they dug deeper, they found internal memos from the top telling cashiers to ask the question and then press the 7% button regardless of the answer; so McD was making the customers pay 14% for sit-down, but making up lower numbers for sit-down and pocketing the difference.
And that was, the court decided, obviously deliberate fraud.
- Along with this case was a public discussion on the logic about why some things are reduced and very similar things are normal VAT. The Basic priniciple is easy enough - Food for daily life like milk and bread is reduced, so People can afford it; books are reduced to encourage education; everything else is not strictly necessary, so People can afford to pay normal VAT. But it’s the Details that were added on for certain things where the devil is.
** Customers who said “To go” and then changed their mind and sat down would not have been the fault of McD. A lot of other Restaurants have different Prices for take-away and sit-down Food, though, not because of tax, but because of rent, waiters etc. for sit-down Food. So call-a-Pizza places usually offer 10% off if you collect instead of having delivered. Gelaterias sell to-go icecream for 1.20 Euro a Scoop, but sit-down is three Scoops for 5.40 Euros, and a sign “Please don’t eat to-go icecream at the sit-down tables”. But it’s internal cost calculation, not VAT reason.