When importing goods into Germany, businesses often encounter Import VAT (Einfuhrumsatzsteuer, EUSt). Understanding when and how this VAT can be deducted as input tax is crucial for compliance and financial efficiency. In this blog post, we at WW+KN, a Baker Tilly Company, will explore the requirements for claiming Import VAT as input tax, including relevant legal references and practical examples.
Legal Framework
The right to deduct Import VAT as input tax is governed by §15 Abs. 1 Nr. 2 of the German VAT Act (Umsatzsteuergesetz, UStG). This provision states that a company can deduct Import VAT if the imported goods are for its own business purposes. Additionally, the VAT Directive (2006/112/EC) of the European Union provides overarching guidelines ensuring uniform application across member states.
Conditions for Input Tax Deduction
To qualify for input tax deduction on Import VAT, the following conditions must be met:
- Business Purpose: The goods must be imported for business purposes. The company must use the goods to generate taxable supplies.
- Ownership and Control: The company must have legal ownership and control over the goods at the time of import. This means that logistics providers and forwarding agents generally cannot claim this deduction since they act on behalf of their clients who retain ownership of the goods.
- Documentation: Adequate documentation, including customs declarations, proof of payment, and invoices, must be provided to support the VAT deduction claim.
Practical Examples
Example 1: Direct Import by the Business
An Austrian wholesaler (Ö) imports goods from a Swiss supplier (S). The delivery terms are “unverzollt und unversteuert” (duties unpaid and taxes unpaid). Here, Ö is the Import VAT debtor upon declaring the goods at customs, thus eligible to claim the Import VAT as input tax since they have control and ownership at the time of import.
Example 2: Import via Logistics Provider
A company contracts a logistics provider to handle the importation of goods. If the logistics provider is listed as the Import VAT debtor, the company itself cannot claim the Import VAT as input tax, since it does not have legal control over the goods during importation. The logistics provider, acting on behalf of the company, cannot claim the input tax either because they do not own the goods.
Documentation Requirements
To claim Import VAT as input tax, businesses must ensure they have the following:
- Customs Declaration: This document confirms the import of goods and the amount of Import VAT paid.
- Proof of Payment: Evidence that the Import VAT has been paid, either directly or through a customs broker.
- Invoice: The invoice should detail the imported goods and confirm their use for business purposes.
These documents are crucial for demonstrating compliance with §15 UStG and supporting the input tax deduction claim.
Legal References
- German VAT Act (Umsatzsteuergesetz, UStG): §15 Abs. 1 Nr. 2 – Specifies conditions for input tax deduction.
- EU VAT Directive (2006/112/EC): Article 168 – Outlines the general principles for VAT deduction within the EU.
- Bundesfinanzhof (BFH) Jurisprudence: Various rulings clarify the interpretation of ownership and control in the context of Import VAT.
Conclusion
Understanding the conditions and requirements for deducting Import VAT as input tax is essential for businesses involved in importing goods. Ensuring compliance with legal provisions and maintaining proper documentation will help businesses optimize their VAT processes and avoid potential issues with tax authorities.
For more detailed advice and support on VAT compliance, feel free to contact us at WW+KN, a Baker Tilly Company, via email at info@vat-germany.com.
