VAT reclaim procedure regarding periods before Brexit
As a result of the exit agreement between the EU and the UK, applications for VAT reclaims relating to periods in 2020 must be submitted by 31 March 2021. Rather than ending after nine months, as it was previously the case, the application period will already expire six months earlier. For entrepreneurs from UK who can claim VAT amounts in Germany for the year 2020, this means that action needs to be taken.
VAT reclaim procedure regarding periods after Brexit
For VAT amounts incurred after 31 December 2020, the VAT reclaims must be applied for directly with the German Federal Central Tax Office (BZSt) and no longer through the British tax authorities (HMRC).
This means, if an entrepreneur from the UK seeks refund of German VAT, his application must be submitted directly to the BZSt. VAT reclaim applications are to be submitted electronically via the BZSt online portal (BOP) and by post. A one-time registration is required before you are able to submit an application electronically.
You can find the forms on the BZSt website (www.bzst.de). Both the site and the forms are available in German and English.
I. Is my business entitled to get VAT refund via VAT reclaim procedure?
Entrepreneurs who are already registered for VAT in Germany cannot use the input VAT reclaim procedure; they have to assert their input VAT claim in their advance VAT return. Businesses that are VAT registered in UK (but not in Germany) can use the VAT reclaim procedure due to the bilateral reciprocity if they meet the further requirements:
- The entrepreneur has neither his headquarters nor management in Germany or in another EU Member State.
- The entrepreneur does not have a fixed establishment in Germany or in another EU Member State from which supplies of goods and services subject to VAT are made in the territory of the country.
- The entrepreneur makes no transactions in Germany except of
- supplies of goods and services for which the purchaser or customer must pay VAT (reverse charge) or
- transactions that are subject to individual transport assessment or
- intra-Community acquisitions in Germany and then associated supplies of goods as part of intra-Community triangular transactions, or
- services that fall under the provision on eService/ECOM.
II. Which VAT positions may be reclaimed?
The refund period may not exceed one calendar year but on the other hand has to include a minimum of three months in general.
The amount of refund requested must be at least EUR 500 for refund periods covering an entire calendar year or the last period of a calendar year. In the case of applications for a shorter refund period (e.g. quarter), the reimbursement amount must be at least EUR 1,000.
Please note that VAT on fuel bills is not refundable.
III. Application form and formal requirements
The formal requirements are extensive and should be observed very carefully.
First you have to fill in the itemized schedule, in which the VAT amounts for each invoice and each import receipt have to be listed individually.
In addition, the original invoices and import receipts from which the refund amounts that were applied for were taken must be submitted. It should be noted that the documents must be submitted in their entirety (not just extracts). They must be numbered beforehand, whereby the order must correspond to the itemized schedule.
Finally, a valid certificate of entrepreneurship from the tax authorities of the entrepreneur's country must be submitted, which has to contain certain specified information (name, address, business activity, tax number…).
After the application has been successfully submitted electronically, the entrepreneur receives a confirmation and a cover sheet. This cover sheet should be used to send all invoices, import documents and the entrepreneur certificate in the original to the BZSt by post.
IV. A matter of timing
The application deadline for VAT reclaims is six months after the end of the year, so for input tax amounts incurred in 2021, the deadline is 30 June 2022. The deadline is non-extendable and applies not only to electronic submission but also to receipt of the original documents by post.
This means that you should allow enough time for the post. Please also bear in mind that the one-time registration process for electronic access will take a few weeks or even a few months, so better start registering without undue delay.
Do you need support with the reclaim procedure? Do not hesitate to contact us, we will be happy to help you, e.g. with a step-by-step guide to the registration process.