Foreign businesses are able to apply for VAT refunds in Germany. There are of course formal regulations to be followed. These regulations differ for businesses from EU-member states and non-EU located ? businesses. Foreign businesses have to meet certain formal requirements. Formal errors result most certainly in the loss of the VAT-refund. Foreign businesses should be very careful when applying for VAT refunds in the EU.
The foreign business has to meet the following conditions:
- The applicant must not be registered, liable or eligible to be registered in the member state from which he is claiming the refund
- The applicant must have no fixed establishment, seat of economic activity, place of business or other residence in that state.
- During the refund period the applicant must not have supplied any goods or services to that state (Exception: Reverse charge regulations are applicable to the person who received supplied goods or services).
The following regulations have to be observed:
|Refunds of VAT for EU businesses||Refunds of VAT for non-EU businesses|
|Refund system||Electronic cross-border refund system||Paper-based refund system|
|Submission of application||through the electronic facility provided by the tax authorities of the applicant’s member state||to the Federal central bureau of taxation (Bundeszentralamt für Steuern)|
|Time-limits for making the application||30 September of the calendar year following the refund year||30 June of the calendar year following the refund year|
|Minimum amount of yearly refunds||€ 50||€ 500|
|Documents to be submitted to German tax authorities||Invoices or import documents with a value of € 1,000 or more (€ 250 in case of fuel)||All invoices or import documents (Originals!)|
|Type of submission of application form and additional||Electronic submission||Submission as paper documents (Originals!)|
|Additional documents||Certificate form of an official authority of applicant’s home country showing that applicant is registered for tax purposes and tax registration number|
An instructive and easy to read introduction to the European VAT refund system can be found on the website of Her Majesty’s Revenue and Customs (Notice 723A).
Note: Minor errors will result in the loss of VAT-refunds as the following case shows:
A Polish firm applied for the refund of German VAT for 2010. The application was made by electronic submission before 30 September 2011 but no invoices have been added. The German Federal central bureau of taxation refused the VAT refund on the invoice with a value of € 1,000 or more. It informed the Polish company on 19 June 2012 about its decision with a special VAT assessment note. On 26 June 2014 the Polish company filed a protest against the decision and did forwarded required invoice in original to the tax authority. On 10 August 2014 the Polish company transmitted copies of the invoices as electronic documents.
The Finance court Cologne rejected the appeal of the Polish company. The application was delayed because the required invoices have not been attached to the electronic submission before 30 September 2011. It also denied an application for restitutio in integrum since the Polish company failed to submit such an application within one month after knowledge of its failure (19 June 2012) and did not submit copies of the invoices by electronic submission within this period. The fact that the Polish company provided originals of the invoices to the tax authorities was deemed to be irrelevant. The Polish company lost the case and its VAT refund for 2010.
The case shows that formal errors result in the loss of otherwise indisputable claims.
Author: Peter Scheller, Tax adviser – Master of International Taxation, www.scheller-international.com