Non-EU businesses, who paid German input VAT and who do not take part in the general VAT scheme can reclaim German VAT amounts according to 13th EU VAT Directive.
With effect from 1. July 2016 non-EU businesses must file their applications electronically via an online portal.
Besides the electronic application the business must still submit the original invoices, import documents and a certificate of taxable status by post as hard copies within the deadline, which ends on 30th June 2017 for VAT amounts from 2016. This deadline will not be extended. Please keep in mind that even airmail may take up to 14 days.
Because the electronic procedure is newly established, it’s advisable, to apply for a reclaim as soon as possible, because experience shows: The closer the end of the deadline, the higher the number of reclaims – and nobody knows, whether the new system will work properly.
The necessary certificate of taxable status needs to show that the business is registered for VAT/tax purposes in the country of residence. For businesses established in the US the required form is called 6166 and is issued by the IRS. The certificate should cover the application period and not be older than one year. In case the certificate is issued late by the institutions in the country of residence, it can usually be submitted later to the BZSt. However, the certificate of taxable status should be requested from the institutions at an early stage.
If the application covers to the whole calendar year the claimed input VAT amount may not be less than 500 €. In case the refund application relates to a period of the calendar year (not less than 3 months) the requested input VAT may not be less than 1.000 €.
Invoice Corrections – Effects on the Refund Procedure
Furthermore, the German input VAT must be linked to business activities. This is regularly the case if the acquired goods or services are used for business purposes. For example, this could be expenses (e.g. hotel and travel expenses) within the scope of trade fairs and business events in Germany. Input VAT on supplies of fuel is non-refundable.
It is important that invoices showing German VAT are made out to the name of the reclaiming business. So it’s e.g. not sufficient, if the invoices show the name of the employee.
New issues arise from the current case law of the European Court of Justice on retroactive effects of invoice corrections (judgement of 15.9.2016 - C-518/14, Senatex). According to this decision, a business can claim input VAT on the basis of incorrect invoices already at the time of the issuance of the incorrect invoice if the invoice is corrected at a later date. So far the German tax authorities have not commented the new jurisdiction.
The new case law might have effects on the current refund procedure. In case a business claims input VAT from an incorrect invoice, the Federal Tax Office will refuse the VAT refund for this invoice. Regularly, the business asks the invoicing party for an invoice correction. So far, the business applied for a new VAT refund referring to the date of the invoice correction. The German tax authorities took the position that a business could recover from input VAT only at the time when the business holds a proper invoice. In case the invoice is incorrect the input VAT could be claimed only at the time of invoice correction. This way the filing deadline (30th of June) did not cause any problems.
In the light of the changed jurisdiction this can be seen differently. In this context, businesses should check incoming purchase invoices more closely and ask for a timely correction before the deadline of 30th June 2017.