Value Added Tax (VAT) or Mehrwertsteuer (MwSt.) in German, was introduced in the Federal Republic of Germany on 1 January 1968.
As Germany is a member of the European Union, its VAT legislation is currently based on EU directives.
The standard VAT rate in Germany is currently 19%. There is also a reduced VAT rate of 7%.
Due to Covid-19, the standard-rated VAT was reduced to and the reduced VAT 16% rate to 5% between 1 July 2020 – 31 December 2020.
Generally, there is no threshold for VAT registration. Registration is required if the company intends to carry out transactions which are subject to German VAT. In the case of distance selling, the current registration threshold is €100,000 (§ 3c (3) German VAT Act).
Registration can be arranged based on a power of attorney. The official standpoint is that correspondence from the tax authority to outside Germany can only be delivered to the seat of the company.
Generally, the following documents are to be submitted:
Description of business activity may also be required depending on the competent tax authority.
Like all EU member states, the German VAT reporting calendar is on an annual basis. Therefore an annual VAT return must always be filed for each calendar year. The company has to report its VAT position by filing preliminary VAT returns on a monthly basis where VAT due in previous calendar year exceeds the amount of €7,500.
Preliminary VAT return has to be filed quarterly if 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. The exception is newly registered companies, which must submit each month for two years.
The VAT declarations are to be submitted by the 10th day of the month following the relevant period:
If the 10th of a month is a Saturday, a Sunday or a national holiday, the deadline is extended until the end of the next working day.
The first VAT return period is determined in the letter of registration by the local tax office.
In Germany, the submission of VAT returns has been done electronically since 2013 (Elster, Datev ect.), with electronic authentication, over the internet. Tax has to be settled before the submission deadline of the VAT return.
Companies are allocated to one of the German tax offices based on the country of residency of the trader.
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An invoice must contain the following information:
Please refer to §14 and §14a UStG for special requirements. In case of reverse charge, intra-community transactions etc, the invoice should contain a respective notice.
The following additional requirements are also to be taken into consideration along with the above mentioned invoicing requirements:
It is allowed to issue an invoice in foreign currency under the German VAT law.
For non-EU businesses in accordance with the German law (§ 22/A –22/E German VAT Act) it is not obligatory to announce fiscal representative. For EU businesses the appointment of fiscal representative is also optional.
Fiscal representation is possible for companies located abroad which conduct business in Germany exclusively free of VAT, and for which no input tax amounts can be deducted.
The Import One Stop Shop was introduced on 1 July 2021. The main goal of IOSS is that a taxable person can register in only one EU Member State to declare and pay all EU VAT due on the goods imported within the scope of IOSS.
It can be used for goods that are located outside the EU at the time of being sold, they are dispatched in consignments of an intristic value not exceeding EUR 150, and they are not subject to excise duties. If the supplier is registered for IOSS, all import VAT due under IOSS through the EU can be remitted an reported in one return.
Businesses established in Germany can register for IOSS in their BOP account.
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