VAT OBLIGATIONS IN GERMANY

How is the tax period determined in Germany? 

Monthly/Quarterly

Your company has to report its VAT position by filing preliminary VAT returns on a monthly basis where [net] VAT due in previous calendar year exceeds the amount of € 7.500 [and also within the first two years for newly incorporated companies].Preliminary VAT return has to be filed quarterly if [net] VAT due in previous calendar year is lower than € 7.500. If the net VAT due in the previous calendar year did not exceed € 1.000, no preliminary VAT returns have to be filed but only the annual VAT return.

When should periodical VAT return be filed?

Preliminary VAT returns must be filed by electronic means via "Elster" to German VAT authorities before the 10th day of the month [10 of N+1] following the tax period [month/quarter] to which it relates. It is possible to apply for a permanent time prolongation of one month which requires a special prepayment. The amount is calculated as 1/11 of the VAT due in the previous year and is set off against the VAT liability of December.

VAT Directive

The tax period shall be set by each Member State at one month, two months or three months. Member States may, however, set different tax periods provided those ones do not exceed one year. The VAT return shall be submitted by a deadline to be determined by Member States. That deadline may not be more than two months after the end of each tax period.

Is this requirement laid down in the country and what is the filing deadline?

Your company has to file an annual summary return [Umsatzsteuererklärung] in Germany. The Statement should be filed by electronic means before May 31st of the next calendar year. As from 2018, this deadline will be extended to July 31st of the following year (i.e. the annual VAT return for 2018 will have to be filed by July 31st 2019) .  A filing extension [up to December 31st] can be obtained upon request.

VAT Directive

Member State may require taxable persons to submit a return in respect to all transactions carried out in the preceding year. That return shall provide all the information necessary for any adjustments.

 

Are quarterly filings allowed by the country and what is the filing deadline?

The recapitulative Statement [ESL] must be filed  on a quarterly basis provided the intra-Community of goods do not exceed € 50.000 in the current calendar quarter and the past four calendar quarters. If the above threshold is exceeded, the Statement must be filed on a monthly basis. The Statement must be filed by the 25th of the month following reporting period [month/quarter].

VAT Directive

The recapitulative statement shall be drawn up for each calendar month. However, Member States, in accordance with the conditions and limits which they may lay down, may allow taxable persons to submit the recapitulative statement on each calendar quarter where the total quarterly amount of intra-EU supplies of goods does not exceed either in respect of the quarter concerned or of any of the previous four quarters the sum of € 50.000 or its equivalent in national currency. The recapitulative statement shall be submitted within a period not exceeding one month.

What is the payment deadline?

The VAT due should be paid by filing deadline for the preliminary VAT return no later than the 10th day of the month after the end of the tax period [month/quarter] to which it relates.  If the tax due on the basis of the annual VAT return exceeds the interim payments or no provisional returns were submitted, the balance due must be paid within one month following submission of the annual VAT return to the tax office. Late payment causes surcharges of 1% of the net tax payable.

Are interim payments required?

The payment made on the basis of the monthly or quarterly provisonal returns are actually interim payments.

VAT Directive

Any taxable person liable for the payment of the VAT must pay the net amount of the VAT when submitting the VAT return. Member States may, however, set a different date for payment of that amount. Member States may require interim payment to be made.

 

Is any VAT credit automatically carried forward or refunded?

No carry-forward mechanism. Refund is done immediately [generally within one month from the deadline for submission of the annual VAT return].

EU Commission requests Germany to align its VAT refund system with EU rules

The EU Commission has decided to send a letter of formal notice to Germanyfor violating the rules related to VAT refunds. Under national rules, a taxable person established in Germany applying for a VAT refund from another Member State via the German web portal can lose the right to a refund because Germany does not follow up on potential error messages from the Member State of refund. The EU Commission considers that Germany is also violating administrative cooperation rules. If Germany does not act within the next two months, the Commission may send a reasoned opinion to the German authorities.

9th Directive VAT Refund - Stricter Approach of formal requirements

As of 20/07/2017, legal changes must be obeyed by foreign claimants. The amendments are already applicable to the refund applications regarding VAT incurred in 2016 and to be filed by 30 September 2017. Accordingly, invoices and import documents are only accepted, if they are filed completely. Otherwise, the refund application could be considered as invalid and/or void by the German Tax Authorities.

VAT Directive

Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period. However, Member States may refuse to refund or carry forward if the amount of excess is insignificant.