To make it clear to the average employed German taxpayer what kind of price savings are involved:
Craftsman A needs materials from Craftsman B for his private house construction. B would realistically purchase the materials for €10,000 net, add a 20% margin, and thus sell to A for €12,000 + 19% VAT = €14,280. Conversely, B as a private person also needs goods from A. Instead of charging each other for the respective goods, both provide the goods to each other free of charge.
Since A and B invoice the goods through their businesses, the goods exchanged cost, with a marginal tax rate of 30%, effectively only €7,000 instead of €10,000 each. A and B thus acquire the goods instead of paying €14,280 at the price of €7,000, i.e. less than half. It becomes even more effective with the labor services. Installing the respective goods would each require 150 hours. Hourly rate estimated at €50. However, the journeymen of both craftsmen do not cost €50 + €9.50 VAT but perhaps only €20/hour minus the marginal tax rate of 30%, so €14/hour. Instead of €8,925 (€59.50/hour x 150 hours), the labor effectively costs only €2,100 (€14/hour x 150 hours). For the entire trade, this means costs of less than 30%.
The issue of undeclared work is neatly avoided by charging at least a small portion of the trade, thus creating a basis for the existence of employees.
The fool is the employee, whose every additional kilometer from home to workplace is deducted from the tax return.
Unconsidered in this calculation, however, are back taxes, fines, and lost income due to imprisonment for negligent tax evasion or tax fraud.