27 December 2012 update
Germany draws up its VAT compliance (VAT registrations and VAT returns) rules based on laws, or Directives, issued from Brussels by the European Union. The current VAT Directive applies to all 27 member states of the European Union, and it govenrs the rules on VAT compliance, and in some part covers the setting of VAT rates. However, the standard German VAT rate, currently 19%, is still set by the German state. Otherwise, if there is a conflict between the German VAT law and the EU VAT Directives, then the EU rules prevail.
Click here if you wish to know more about the German VAT registration requirements
Germany VAT Law
The German VAT law, based on the EU VAT Directive, is contained within the Value Added Tax Act of 1980 – Umsatzsteuergesetz (UStG). This had been revised a number of times since. German tax law is implemented by the Federal Parliament. However, it is administered by the 16 federal states (Bundesländer).
German VAT Registration
Both EU and non-EU businesses may trade in Germany without establishing a local preseence - known as non-resident VAT trading. There is no VAT threshold in Germany for registration of non-resident traders – a VAT number must be in place before the commencement of taxable supplies.
There are strict rules on the situations where a German VAT registration is permitted. Common scenarios which require a registration include:
- Importing goods into Germany;
- Organising live events, conferences etc in Germany;
- Holding goods in a warehouse in Germany as stock for resale;
- Buying goods within Germany which are subsequently resold in-country;
- 'Supply and install' services over 12 months;
- Selling goods from Germany to other EU member states; and
- Distance selling to private individuals in Germany, e.g. internet retailing.
Registering for German VAT generally takes three weeks, although this can vary. A tax payer must register with the specific tax office allocated to his country. For example: Italy to München II; and Spain to Kassel-Hofgeismer.
German VAT Compliance
There are detailed rules controlling the recording and processing of German transactions for Value Added Tax purposes. These include guidelines on:
- German invoice requirements;
- When to issue a German tax invoice;
- Foreign currency reporting;
- Credit notes and corrections;
- Correcting entries from prior returns; and
- What accounting records must be maintained.
Germany VAT RETURNS
Companies with a German VAT number must complete periodic returns detailing all taxable supplies (sales) and inputs (costs). Generally, VAT returns are submitted monthly in Germany. German VAT returns are due by the 10th of the month following the reporting period. German returns are filed electronically through the ELSTER system.
There is also a requirement to submit an annual German VAT return by the end of May of the following year, although this is under review.
German Intrastat and EC Sales Lists
In addition to VAT returns, companies may be required to submit additional German Statistical Information.
The German Intrastat, which lists sales (dispatches) and purchases (acquisitions) within the EU region, must be filed monthly once the annual threshold is exceeded. German EC Sales Lists, or recapitulative statement, details customers and the values of sales made to them. It should be submitted on a quarterly basis once the annual threshold is exceeded.
Germany VAT Refunds
If a foreign company is selling goods in Germany, but unable to obtain a German VAT number, or simply incurring German VAT on local goods or services, then VAT may be recovered through a German VAT Reclaim.
For more details on VAT Reclaims, click here.
To talk about our German VAT services, enquiries should contact TMF's UK office, which co-ordinates TMF's European VAT services. TMF has offices in Frankfurt.
You may wish to see our German-language website: www.tmf-vat.de
+44 (0)870 067 8881