VAT Refund in Germany for Online Sellers
For entrepreneurs conducting online sales in the German market, proper VAT management in Germany is crucial. If your business is registered as a VAT taxpayer in the country, it’s important to understand how the VAT refund process works. This knowledge will help you better manage your finances and optimize cash flow.
VAT Refund in Germany for Already Registered Businesses
If you have a German VAT number, the refund process is handled through standard tax declarations submitted to the tax office.
When Can You Apply for a VAT Refund?
Notification from the tax office about VAT refund – The German tax authorities may notify you about an overpayment of VAT and indicate the possibility of reclaiming it. This happens when the system detects a surplus tax resulting from previous settlements.
Negative balance in VAT declaration – A VAT refund in Germany is possible when the tax paid on business expenses (input VAT) exceeds the amount of tax collected from customers (output VAT). This can occur when there are higher expenses for purchases, imports, or other operational costs.
What to Do After Receiving a Refund Notification?
After receiving a letter from the German tax office, you can:
Carry forward the balance to the next period – If the letter states that the surplus can be carried forward to the next period, no additional actions are required. If no such mention is made, it’s worth contacting the tax office for confirmation.
Request a bank transfer refund – If you want the VAT refund to be paid to your bank account, follow the instructions in the letter. You will need to fill out a form, provide your account number, and include the authorized signature.
It’s advisable to act promptly, as delays in responding could result in additional queries from the tax office and potentially prolong the refund process.
How Often Can You Apply for a VAT Refund in Germany?
You can claim a refund after each settlement period if there is an excess of input VAT over output VAT. This allows businesses to regularly recover overpaid VAT and improve financial liquidity.
VAT Refund for Businesses Not Registered in Germany
If your business is not registered as a VAT taxpayer in Germany but has incurred costs subject to VAT (e.g., storage fees, imports, or other services), you can still apply for a refund. There are two refund mechanisms depending on the location of your business.
For Businesses Registered in the EU
If your business is based in another EU country, you can use the EU procedure (former 8th Directive) and apply for a refund of VAT paid in Germany through your country’s tax portal. The deadline for submitting claims is September 30th of the year following the invoice date.
For Businesses Outside the EU
Non-EU businesses can apply for a VAT refund under the 13th EU Directive. The application must be submitted directly to the German tax office, along with invoices and payment confirmations.
In both cases, it’s essential that the business is not registered for VAT in Germany, and the tax can only be reclaimed for costs related to business activities. Refund applications must be submitted by June 30th of the year following the invoice date – after this date, the possibility of recovering the tax expires.