In Germany, failing to provide the necessary proof for VAT-exempt intra-community supplies or exports can lead to significant financial and legal consequences. Here’s an in-depth look at the requirements, potential consequences, and practical tips for compliance, complete with concrete examples.
Legal Requirements for Proof
To qualify for VAT exemption on deliveries to foreign countries, businesses must provide specific documentation:
- Intra-Community Supplies (Section 6a UStG)
- Proof of Transport: This can include CMR waybills, bills of lading, tracking information from postal or courier services, or a signed confirmation of receipt by the customer.
- Customer’s VAT ID: The recipient’s valid VAT identification number from the other EU country.
- Gelangensbestätigung: A confirmation of arrival signed by the recipient, stating the goods have arrived at their destination.
- Exports to Non-EU Countries (Section 6 UStG)
- Export Documentation: Proof that the goods have left the EU, such as export declarations, exit certification from customs (Ausgangsvermerk), and transport documents (e.g., airway bill, bill of lading).
Consequences of Missing Proof
- Loss of VAT Exemption
- Without the required documentation, the transaction will not qualify for VAT exemption. For example, if a company exports goods worth €100,000 but fails to provide an export declaration, it will have to pay 19% VAT on that amount, resulting in a VAT liability of €19,000.
- Financial Penalties
- The business may face penalties and interest on the unpaid VAT. For instance, if the standard VAT rate is applied retroactively, the financial burden can increase significantly.
- Increased Risk of Tax Audits
- Missing documentation can trigger tax audits. During an audit, if the tax authorities find that a company repeatedly fails to provide adequate proof of transport, they may subject the company to more frequent audits.
- Administrative Burden
- Businesses may need to spend considerable time resolving issues with tax authorities. For example, if a company has to provide supplementary evidence post-audit, it can disrupt normal business operations.
- Legal Consequences for Executives
- In severe cases, managing directors could face criminal charges. For example, if the absence of documentation is part of a pattern indicating tax evasion, executives might be charged with intentional tax evasion.
Concrete Examples of Required Documentation
- CMR Waybill (For Intra-Community Supplies)
- This is a standard consignment note used for road transport in Europe. It includes details about the consignor, consignee, description of goods, and transport conditions.
- Example: A German company shipping machinery to France must ensure the CMR waybill is completed and signed by the carrier and consignee upon delivery.
- Bill of Lading (For Exports to Non-EU Countries)
- A bill of lading is a document issued by a carrier to acknowledge receipt of cargo for shipment. It serves as a shipment receipt and a document of title.
- Example: An exporter in Germany sending goods to the USA must have a bill of lading issued by the shipping company, detailing the type, quantity, and destination of the goods.
- Exit Certificate from Customs (Ausgangsvermerk)
- This document certifies that goods have physically left the EU. It is usually provided by the customs office where the goods exit the EU.
- Example: When exporting to a non-EU country, the German exporter must obtain an Ausgangsvermerk from the customs office to prove the goods have left the EU territory.
- Tracking Information from Postal or Courier Services
- For smaller shipments, tracking information from postal or courier services can serve as proof of transport.
- Example: A German e-commerce company sending products to Italy via DHL must retain tracking information showing the delivery route and confirmation of receipt.
- Gelangensbestätigung (Confirmation of Arrival)
- This document confirms that the goods have arrived at their destination in another EU country. It must be signed by the recipient and include details such as the quantity and description of the goods, the date of receipt, and the location.
- Example: A German company exporting goods to Austria must obtain a signed Gelangensbestätigung from the Austrian recipient confirming the goods’ arrival.
Practical Tips for Compliance
- Maintain Detailed Records
- Keep comprehensive records of all transactions, including transport documentation, customer VAT IDs, contracts, and correspondence.
- Verify Customer Information
- Regularly verify the VAT identification numbers of EU customers using the VIES (VAT Information Exchange System).
- Use Reliable Transport and Logistics Partners
- Work with reputable transport and logistics companies that provide comprehensive documentation and tracking information.
- Consult Tax Advisors
- Engage with tax advisors experienced in VAT regulations to ensure all requirements are met and to receive guidance on maintaining compliance.
Support from WW+KN
WW+KN, a Baker Tilly Company, offers comprehensive support in managing VAT obligations. Our services include reviewing VAT filings, verifying documentation, and liaising with tax authorities. Additionally, Baker Tilly Legal provides specialized legal support in tax criminal law. WW+KN can serve as a single point of contact, ensuring your business remains compliant with German tax law. Contact us at info@vat-germany.com for expert assistance.
