Rules for VAT refund from Germany

A VAT refund from Germany is an essential aspect for entrepreneurs making purchases in this country. This process is regulated by the Council Directive 2008/9/EC of 12 February 2008, which lays down the detailed rules for the refund of value-added tax (VAT) within the European Union.

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Who can apply for a VAT refund from Germany?

VAT refunds in Germany can be obtained by companies that meet certain conditions:

1. Active VAT payer in Poland: The company must be registered as a VAT payer in Poland.
2. No headquarters in Germany: The company cannot have a headquarters or branch in Germany.
3. No permanent activity in Germany: The company does not conduct permanent business activities in Germany, except for the transportation of goods and ancillary services.
4. Correct invoices: The company must have correctly issued invoices, without German VAT, if the transaction meets the requirements for intra-community acquisition of goods or services.

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Amounts for VAT refund applications

The minimum amount for a VAT refund application from Germany depends on the period for which the application is submitted:

• Periods shorter than a calendar year: The minimum amount is €400.
• Entire calendar year or the period from November to December: The minimum amount is €50.

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What can VAT be recovered for?

VAT paid in Germany can be recovered for various goods and services purchased by the company in this country, including:

• Fuel,
• Oils,
• Parking fees,
• Road tolls,
• Hotels,
• Vehicle rentals,
• Repairs,
• Other business-related expenses.

The cost of fuel in Germany is often higher than in neighboring countries, highlighting the benefits of recovering VAT on these purchases.

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Where to submit the application?

The VAT refund application should be submitted to the tax office appropriate for the company’s place of registration. After verifying the basic information, the tax office forwards the application to the relevant authority in Germany – the Federal Central Tax Office (Bundeszentralamt für Steuern), which thoroughly reviews the application and issues a decision.

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Deadlines and application periods

VAT refund applications from Germany can be submitted quarterly, annually, or for the last two months of the year. The latest deadline for submitting applications for the previous year is September 30 of the current year. Entrepreneurs should remember that applications are processed in the order they are received, and the waiting time for a decision is an average of four months, although it may be extended in special cases.

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Waiting time for refund

If the tax office requests additional information while waiting for a decision, the waiting period is extended by another two months. The entire process may include:

1. Verification of the application by the Polish tax office – up to 15 days,
2. Verification by the German office – up to 4 months,
3. Possible extension of the deadline by 2 months in case of an audit,
4. Final decision issuance.

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VAT registration in Germany

VAT registration is essential for foreign companies conducting taxable transactions in Germany. VAT operates under two names: Mehrwertsteuer and Umsatzsteuer, which are used interchangeably. Companies without a headquarters in Germany but conducting taxable activities there must register for VAT before starting their activities to avoid penalties from the German tax office. Exceeding the annual distance selling threshold of €10,000 obliges entrepreneurs to settle VAT in Germany or use the VAT-OSS procedure in their home country. The German tax office sets settlement periods, which can be monthly, quarterly, or annually, and VAT returns must be submitted within specified deadlines. Additionally, VAT registration is required for companies delivering goods from Germany, importing goods with customs clearance in Germany, transporting persons through Germany, and providing real estate-related services in the country. Since July 2021, it is also possible to settle distance sales to EU countries using the One Stop Shop (OSS) procedure, which can be beneficial for entrepreneurs selling goods to multiple member states.

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VAT rates in Germany

Germany has three main VAT rates. The standard rate is 19% and applies to most goods and services. The reduced rate of 7% applies to selected products and services, such as foodstuffs, certain medical services, short-term accommodation, cultural events, and medical care. Additionally, there is a 0% rate applicable to intra-Community and international transport, excluding road and rail transport, and some means of inland waterway navigation..

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Required documents

When submitting an application, it is important to remember the appropriate documents. Receipts are accepted up to the gross amount of €250, above which an invoice or a stamped receipt from the gas station with the employee’s signature is required. The receipt should also bear the buyer’s company stamp. The absence of an invoice or a signed receipt does not mean such documents cannot be included in the application. One can request an invoice from the issuer.

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Professional assistance in VAT recovery

The VAT recovery process from Germany may seem complicated, so it is worth using professional services. Specialized companies dealing with this topic can significantly shorten the waiting period for a refund and minimize the entrepreneur’s involvement in the entire process.

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Summary

A VAT refund from Germany can bring significant financial benefits to entrepreneurs. However, it requires meeting certain conditions and providing the appropriate documents. Understanding the rules and using professional help can facilitate the entire process and speed up obtaining the refund. It is advisable to start the procedure as soon as possible to avoid a long wait for a decision.

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If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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