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A couple of points here-Jackie, as far as I know you have to be earning quite a lot before you are obliged to pay UmSt monthly.
Most trainers have to pay it yearly. I suggest you check it out with your tax consultant. If there is any way you can switch to an annual
Umsatzsteuererklärung, that is what you should go for. I am surprised that your Finanzamt says you have to pay monthly for the next two years. I always thought that
the payment module was decided on a yearly basis, the only thing which cannot be reversed is that if you charge UmSt in one year you can't ever go back to not charging it, however low your income falls. Again, I would check with your consultant or research in the internet to find out if the Finanzamt is permitted to fix the rule for payments for two full tax years. I think you could successfully appeal against it if you started earning very little. If you only have to make an annual UmSt return there are clear advantages:

1) It involves much less work and trouble
2) You make more money on it because you get to keep the interest on your UmSt cost centre over a year

Like John I am no UmSt specialist but I would imagine that all UmSt is lumped together unless you separate your businesses, something which you can probably do, but that would mean that you would then have to have two VAT identification numbers.


A few other points I expect you know but just in case you don't

working for institutions which are UmSt exempt is a drag VAT-wise in that you have to discount in percentage the amount deductible from your payable UmSt
in the same percentage. That sounds more complicated than it is. It means if 20% of your earnings are from a VHS-the VHS's are all VAT exempt- then you can only use 80% of the VAT paid on your outgoings
as deductible from your VAT tax burden.

Everything bought abroad is not UmSt deductible for tax purposes. This is worth bearing in mind if you are thinking of buying an expensive pc system from the UK for example.
It might make financial sense paying a little more in Germany because you will obtain your VAT deduction on the pc bought in Germany but not on the one bought in the UK. I expect this will change as Europe gets more united but it will be a few years yet before all countries are regarded as the same for VAT purposes-so long as they have different rates this ruling will apply.

If you calculate your UmSt outgoings as a percentage of your total outgoings, you need to remember that a few things are only 7% (eg books) and a few things (eg stamps) are VAT exempt

Still the good news is that for all the calculations, VAT creates a small tax break for self employed people as opposed to the end consumer, since the money we pay the Finanzamt every year (or in your case every month!) is always going to be below what we receive in VAT payments. the big loser in the VAT system is the end consumer and indirectly the self-employed person in the sense that it makes services dearer and therefore less attractive.

VAT is the single biggest cause of Schwarzarbeit.

Lastly, I'd give a big word of advice to everyone-VAT requires discipline or it can sink a small business. Discipline in this sense means have a bank account/cost centre just for VAT and nothing else. Everytime an invoice is paid make sure that the VAT part of it goes into your VAT account before you even start to think of it as your money.
I would really advise that very strongly.

Yorick