The Only VAT Return Germany Guide You Will Need (2022 edition)

This VAT return in Germany guide is for you if you either:

• Ship products to Germany and sell them there
• Store products in Germany
• Participate in the Amazon FBA program
• Sell products to the German Market over Amazon and eBay

How does VAT work in Europe?

If you already have experience with selling products and services outside your own country, you might have noticed that VAT rates differ from country to country.

In fact, each country within Europe has the right to define its VAT rates as long as they surpass the minimum standard required VAT rate of 15 percent as defined by the VAT Directive Article 97 of the EU regulation.

What are the German VAT rates?

To your luck, Germany’s VAT rate lies under the European average VAT rate of 21 percent.

The standard German VAT rate is 19 percent, while there are exceptions regulated through the reduced German VAT rate of 7 percent.

The standard German VAT rate of 19 percent

As mentioned above, the standard VAT rate in Germany is 19 percent. All services and products that do not fall under specific categories and regulations are subject to the 19 percent rate.

The reduced German VAT rate of 7 percent

To give you more applicable information, we have compiled a list of service and product categories that fall under the category of reduced German Vat.

The main product and service categories that fall under the reduced German VAT rate regulation of 7 percent are as follows:

• Medical and dental care
• Social services
• Agricultural work
• Creative workers in terms of writers and composers
• Educational products in terms of books, newspapers, and audiobooks
• Support for disabled persons, e.g., medical equipment
• Accommodation 
• Gold and jewelry taxation
• Any workaround supplying water – including commercial organizations and public utilities

Special german Vat regulations during Covid-19

To support restaurants and catering services, the German government decided to reduce the VAT rates for companies that provide food.

The current regulations in the time of November 2021 reduce the VAT rate for these services between January 1st, 2021, to December 31st, 2022, down to the 7 percent rule.

How to file in your VAT return in Germany

To file your VAT return in Germany, you have to register on the German tax office’s online service ElsterOnline and submit your VAT using their system electronically.

You can find the VAT forms under “Formulare & Leistungen” -> “Alle Formulare” ->“Umsatzsteuer”.

Depending on your companies’ situation, the form you need to use differs.

For monthly and quarterly VAT regulations, choose “Umsatzsteuer-Voranmeldung”.

For your annual VAT refund, choose “Umsatzsteuererklärung.”

In the particular case that you need to file your VAT return one month later, choose “Dauerfristverlängerung.”

When to make your VAT return in Germany

The due dates for your VAT return vary in Germany based on the payable VAT amount of your previous calendar year.

This specific amount defines if you have to do your VAT refund monthly, quarterly, or yearly.

The yearly VAT return

If the total amount of your payable VAT in the previous calendar year is under €1,000, your company will be allowed to hand in the VAT return yearly.

The annual VAT summary is due on the last day of July following the reporting period.

The quarterly VAT return

If the total amount of your payable VAT in the previous calendar year is above €1,000 and does not exceed €7,500, your company will be allowed to hand in the VAT return quarterly.

The quarterly VAT summary is due on the 10th day of the first month after the reporting period. For Q1, your company’s return due date will be April 10th.

The monthly VAT return

If the total amount of your payable VAT in the previous calendar year is above €7,500, your company will be allowed to hand in the VAT return monthly.

The monthly VAT summary is due on the 10th day of the following month. For January, your company’s return due date will be February 10th.

What if the due date of a given period’s VAT return is on a weekend or holiday?

If the due date of your VAT return falls on a holiday or weekend, the due date falls on the next business day.

What if I can’t make the due date? Can I postpone the VAT return due date?

If you can’t manage to file your VAT return on the stated due dates, you can postpone the VAT return deadline by exactly one month.

Meaning, if you need to postpone your quarterly VAT return of the first year’s quarter, you need to file your VAT by May 10th instead of April 10th. 

To be allowed to delay filing, you have to apply electronically for the procedure called “Dauerfristverlängerung” on the ElsterOnline platform latest by your original deadline. Many tax advisers recommend doing the application right from the start, as it gives your company more flexibility.

Specific additions may apply if you need to pay your VAT return every month.

Monthly regulated companies need to prepay one-eleventh of the VAT payment of the previous year if they want to use the “Dauerfristverlängerung.”

Exceptions of this prepayment rule might apply.

What if I had no transactions in a given period?

Even if you made no transactions in a given period, you still have to fill out the VAT form and file it on the due date. You can skip most of the form as long as you make sure to put a zero in the final VAT position.

Special regulations for working with tax consultants

If a recognized tax consultant submits your annual VAT return, the due date will shift from the end of July to the end of February, a year after the original due date.

As an example, your VAT return for 2019 will not be due on July 31st, 2020, but instead be due on February 28th, 2021.

5 steps to joyful VAT returns

If you’re usually stressed and worried about your VAT returns, and you need to spend hours and hours to find all the necessary information to file your return correctly, we have a solution for you.

These are our 5 steps to joyful VAT returns that helped us and all our clients to make VAT refunds less time straining and more enjoyable.

1. Create two google sheets.
2. Use one of these sheets to track all your business expenses. By doing this, you will have a simple overview of the possible VAT you can claim back.
3. Use the other sheet to track how much VAT you charge each of your clients. By doing this, you will be able to add up the numbers to figure out your total VAT amount.
4. Make sure to create a browser shortcut to both these sheets to make them easily accessible.
5. Use both these sheets regularly. It’s easier to put in one number right away compared to putting in hundreds of numbers at the end of a month.

What happens if I don’t file vat returns?

Not filing in your VAT returns may result in different VAT penalties depending on the exact situation.

The exact VAT Penalties are differentiated by:

• Late registration

• Late payment

• Late filing

1. Late VAT Registration

In most cases, you will not receive penalties for late VAT registration. Nonetheless, there might be exceptions where you will still be fined a penalty.

This especially applies if it is noticeable that your company delayed the VAT registration or made errors on purpose.

2. Late VAT payment

The general penalty for late VAT payment is a 1 percent penalty on the amount due for each delayed month.

One word of advice: Don’t play with fire. If you play too much with the patience of the tax offices, your penalties might become worse. And they add up pretty quickly.

Use our 5 steps to joyful VAT returns mentioned before to make sure you can easily pay the amount due in time.

3. Late VAT filing

Out of the three mentioned penalties, this is the one you definitely want to avoid the most. For late VAT filing, you might be charged up to 10 percent of the amount due. This charge can go up to €25,000 in the worst cases. 

Similar to number 2, this penalty can be easily prevented by following the 5 steps to joyful VAT returns.

No more stressful VAT returns

You now have all the information you need to make your VAT returns enjoyable and avoid costly penalties.

Even with all this information, there might still be areas that you’re missing. Or additions that will make your VAT calculations even better.

M&M Consultants can take over the VAT returns and communication with the tax authorities. Our experts and major network of tax consultants will ensure your success in Germany.

Send us a message or book a free call here.

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