Managing VAT (Umsatzsteuer) can be a complex task for any company, particularly for German GmbHs, which often form part of larger, international corporate structures. One useful mechanism available to ease the burden of VAT reporting is the “Dauerfristverlängerung” (permanent extension for VAT returns). Here, we explain what this extension entails, its benefits, and the conditions that must be met to qualify.
What is a Permanent Extension for VAT Returns?
A “Dauerfristverlängerung” allows businesses to extend the filing deadline for their monthly or quarterly VAT returns by one month. This can be particularly beneficial for companies that need more time to gather and process the necessary information for accurate VAT reporting.
Legal Framework
The legal basis for the Dauerfristverlängerung is found in the German VAT Act (Umsatzsteuergesetz – UStG), specifically under § 18 (6) UStG. Additionally, the administrative guidelines for the application process are detailed in the German VAT Implementation Guidelines (Umsatzsteuer-Anwendungserlass – UStAE), particularly under Section 18.4 UStAE.
Benefits of a Permanent Extension
- Extended Filing Time: Businesses receive an additional month to file their VAT returns, reducing the pressure and potential for errors.
- Improved Cash Flow Management: The extension can help companies better manage their cash flow by providing more time to organize their finances before the VAT payment is due.
- Enhanced Accuracy: With more time to prepare, companies can ensure their VAT returns are more accurate, minimizing the risk of costly mistakes and penalties.
Conditions and Requirements for a Permanent Extension
To qualify for a Dauerfristverlängerung, companies must meet specific conditions and follow a set procedure:
- Filing an Application: Companies must file an application with their local tax office (Finanzamt). This can be done electronically through the Elster online portal. The application process is outlined in § 18 (6) UStG and further detailed in Section 18.4 UStAE.
- Prepayment of VAT: If a company applies for a permanent extension, it must make a prepayment (Sondervorauszahlung) equal to one-eleventh of the previous year’s annual VAT liability. This prepayment is adjusted against the final VAT liability at the end of the year, as stipulated in § 47 UStDV (Umsatzsteuer-Durchführungsverordnung).
- Application Deadline: The application for the permanent extension must be submitted by the end of the first month of the fiscal year (i.e., by January 31st for most companies). This deadline is specified in § 18 (6) UStG.
- Timely Submission of VAT Returns: Companies must consistently submit their VAT returns on time to qualify for and maintain the Dauerfristverlängerung. This requirement is outlined in Section 18.4 UStAE.
Special Considerations
- New Businesses: Newly established businesses can apply for a permanent extension immediately but may need to estimate their annual VAT liability for the prepayment.
- Quarterly Filers: Companies that file VAT returns quarterly can also apply for a Dauerfristverlängerung, although the process and requirements are similar to those for monthly filers.
- Revocation of Extension: The tax office can revoke the Dauerfristverlängerung if the company fails to comply with the requirements, such as not making the prepayment or missing deadlines, as stated in § 18 (6) UStG.
How WW+KN Can Assist
Partnering with an experienced firm like WW+KN, a Baker Tilly Company, can simplify the process of applying for and maintaining a permanent extension for VAT returns. Our services include:
- Application Assistance: We help prepare and file the application for the Dauerfristverlängerung, ensuring all requirements are met.
- Prepayment Calculations: Our team accurately calculates the required prepayment and manages its submission.
- Ongoing Compliance: We assist in preparing and submitting monthly or quarterly VAT returns on time, ensuring continued eligibility for the extension.
- Consulting and Advisory: We provide expert advice on VAT management, helping businesses understand and navigate German tax regulations.
Contact Us
If you need assistance with your VAT obligations or want to apply for a Dauerfristverlängerung, WW+KN, a Baker Tilly Company, is here to help. For more information, please reach out to us at info@vat-germany.com.
Conclusion
Understanding and utilizing the permanent extension for VAT returns can greatly benefit your GmbH, providing extra time for accurate and compliant VAT reporting. With the support of WW+KN, you can navigate this process smoothly and ensure your business remains in good standing with German tax authorities.
Feel free to contact us today to learn more about how we can support your VAT accounting needs and help you make the most of the Dauerfristverlängerung.
