Effective method
Under the effective method the tax is calculated on turnover and the input tax actually paid is deducted from it; this is the standard method and it requires every purchase invoice to be recorded with its tax amount.
Definition
The effort is higher than under the net tax rate method, but the result is more accurate — and considerably cheaper for investment-intensive businesses, because input tax on acquisitions counts in full. Whoever buys little and sells mostly their own labour is often better off with the net tax rate.
Switching methods is not free: it is bound to deadlines and triggers corrections on inventory. Before switching, the calculation is worth doing over several years rather than one quarter.
Where to read it
What the software must be able to do
The software has to handle both methods and represent the switch cleanly. Whoever uses the net tax rate needs only turnover per rate; whoever uses the effective method needs input tax per document — that is a difference in recording discipline, not just in reporting.
Checked Aug 2026
More terms under VAT and customs: Acquisition tax Customs declaration Exempt supplies Flat-rate VAT method Input tax Margin taxation Non-consideration Own use Place-of-recipient rule Reduction of consideration Takeaway 2.6 vs. eat-in 8.1 Value added tax VAT 3.8 % accommodation VAT 8.1 / 2.6 / 3.8 % VAT liability