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German VAT Refund

In Germany there are two types of vat rate i.e. Standard rate (19%) and Reduced rate (7%). Both the rate is applicable to the following sectors:

♦   Trade fair expenses (exhibition booth rental, assembly, construction, etc.)
♦   Conference costs
♦   Accommodation and travel expenses (hotel, restaurant, taxi fares, fuel, food, parking fees, etc.)
♦   Expenses incurred while visiting customers in Germany
♦   Service costs (interpreters, advertising, catering, etc.)
♦   Training courses in Germany
♦   Outsourced services

Reduced rate is charged for the hospitality industry like foodstuffs and taxi journeys

Eligibility for German Vat Refund:-

♦   The VAT will be reimbursed if the goods are purchased and exported by a customer who is a
    resident of outside the European Union (EU). So as to qualify for tax-refund the goods must be
    exported within three months of purchase. Problem is that one should 'export' the purchases and
    get it stamped from customs, but to obtain the vat, one must reenter the country (e.g. on your next
    trip ) and visit just the same shop where the is made. The German Customs Office is generally
    responsible for the refund procedures relating to private persons.
♦   As per the Art. 18 sec. 9 UStG entrepreneurs without having registration in Germany and do not
    produce revenue that is liable to German VAT, are in a position to apply for a vat refund in
    Germany.
♦   Foreign companies who are engaged in exhibiting their products and services in a trade fair in
    Germany get the eligibility to apply for a VAT refund depending on the country where their business
    is established.
♦   EU inhabitants can reclaim for a German VAT for a period of no less than 3 following months up to
    a calendar year. The refundable VAT should be amounted to 200 € or more (20 € or more if the
    application period is the calendar year).
♦   Entrepreneurs from non-EU states are eligible to a VAT refund if no VAT or similar tax is charged
    in their native country, paid German VAT is not deductible in this system and if the foreign
    government has signed a reciprocity agreement with Germany.

All refund application and the relevant attachments along with invoices must be collected and submitted to the competent German Tax Office with a formal request for a VAT refund. The system is termed in German as : Vorsteuer - Vergütungsverfahren. June 30th of the each calender year is the deadline for filing an application for a refund of German VAT.

Enterprises from countries that do not charge VAT are generally exempt from the refund. The same applies to businesses from non EU countries that do not reciprocally refund the local VAT to German companies doing business in their country. The German Ministry of Finance has published a list of countries with which Germany has signed a VAT reciprocity agreement.

Registered Entrepreneurs in Germany have the ability to subtract the paid VAT from the VAT applied to customers. As a result, VAT is only a transit item for those entrepreneurs. This is related with entrepreneurs that incurred travelling and trade fair costs in Germany, foreign entrepreneurs who purchased i.e. material and equipment, consulting and telecommunication services etc. in Germany.

You must inform the retailer before buying any goods in Germany indicating that the goods will be exported to the other countries. After the transaction you will get a so-called “Ausfuhrbescheinigung” (export papers) or a Tax Free Shopping Check with your receipt.

When leaving the European Union – through Germany only all the documents including the export papers or the Tax Free Shopping Check, the original receipt of the store, the purchased goods and your passport showing residence outside the EU (plus your German deregistration) should be produced to the relevant tax office.

If you travel through plane, you must keep the objects that are in your main luggage confirmed by the customs office at the first airport of departure before transferring it at the check-in desk.

After having returned to the country where the export is made, the stamped invoice should be sent back to the store in Germany where the good was purchased. For the Tax Free Shopping Check you are eligible to get cash refund if they have an office at the airport. Otherwise the check should be sent to the address on the back of the Tax Free Shopping Check where you will find detailed instructions for the refund.

In Germany minimum purchase is required to €25 (in local currency) and $35(in US dollars.

Import Sales Taxation

An ''import turnover tax'' (Einfuhrumsatzsteuer) of 19 percent is levied on goods supplied from non-European countries into Germany. It is identical to the value-added tax (Mehrwertsteuer) that is charged on all items sold domestically assigning the same tax burden on imported and domestic products. The import turnover tax is levied on the customs valuation on the imported good & a customs duty. A 7 percent reduced tax is levied on food products, books, newspapers, pieces of art etc.

Importers will subtract this import tax as input tax (Vorsteuer) from their value-added tax bill whether the goods have been acquired for resale purposes. In this regard the company should have submitted the necessary import documents (import declaration).

The German customs authorities collect both customs duty and import turnover tax. More information is available on the website of the German Customs Office.

IMPORTENT LINKS

Vat refund in Germany
Germany Vat rate
German Vat Rule
German Vat Registration
VAT Refund for Foreign Exhibitors

 



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