VAT Exemption for Supplies and Services to NATO Forces in Germany

WW+KN, a Baker Tilly Company, provides specialized support for suppliers and service providers to NATO forces in Germany. Proper handling of VAT exemption forms is essential to comply with German tax regulations and to benefit from tax relief under the NATO Status of Forces Agreement (SOFA). Here’s an overview of the necessary steps and requirements:

Key Points

  1. VAT Exemption Under NATO SOFA:
    • According to Article 67(3) of the NATO SOFA, supplies and services provided to NATO forces stationed in Germany, including their civilian components, are exempt from VAT.
    • This exemption applies to goods and services intended for the exclusive use or consumption by the troops, their civilian personnel, or their dependents.
  2. Official Procurement Process:
    • Orders must be placed by an official procurement office of the troops or their civilian components, or by a German authority acting on their behalf.
    • The procurement office must issue a procurement form signed by an authorized representative to validate the order.
  3. Documentation Requirements:
    • Proper bookkeeping and proof are required to validate the VAT exemption. This includes an appropriately completed procurement form (Abwicklungsschein).
    • The procurement form is necessary for orders exceeding specific value thresholds, such as €2,500 for American, British, and Belgian forces; €2,000 for French forces; and €1,500 for Canadian and Dutch forces.
  4. Simplified Procurement Procedures:
    • For procurements below the specified thresholds, simplified procedures are in place to ease the VAT exemption process.
    • Detailed guidelines and forms for simplified procurement can be found in the relevant Bundesfinanzministerium (BMF) documents.
  5. Invoice and Price Calculation:
    • Invoices must reflect the VAT exemption and should not include VAT if the exemption criteria are met.
    • The invoice recipient should be the troop or civilian component via the official procurement office, not individual members of the forces.

Compliance Details

  1. Official Procurement Office as Client:
    • The procurement must be conducted through the official procurement office of the NATO forces or a German authority acting on their behalf. The order is only valid if signed by an authorized representative from the procurement office.
    • The BMF provides a list of official procurement offices and organizations authorized to issue such orders.
  2. Exclusive Use or Consumption:
    • Supplies and services must be exclusively for the use or consumption by the NATO troops, their civilian personnel, or dependents. Eligible individuals include members of the troops, civilian personnel, and their families as defined in the NATO SOFA.
  3. Proof of VAT Exemption:
    • To document the VAT exemption, businesses must provide proper bookkeeping and proof through a duly completed procurement form (Abwicklungsschein).
    • The exemption documentation should comply with § 73 Abs. 1 and 2 of the German VAT Implementation Ordinance (Umsatzsteuerdurchführungs-Verordnung, UStDV).
  4. Simplified Procedures:
    • Simplified procurement procedures apply to transactions within certain value limits, streamlining the process for VAT exemption.
    • Value limits for simplified procedures vary by country (e.g., €2,500 for American and British forces, €2,000 for French forces).

Services Offered by WW+KN

  • VAT Registration: Assisting with VAT registration for suppliers to NATO forces.
  • Compliance Management: Managing ongoing VAT compliance and documentation.
  • Consultation: Providing expert advice on VAT exemption procedures and compliance requirements.
  • Liaison with Authorities: Coordinating with German tax authorities to resolve any issues and ensure smooth VAT exemption processing.

Expertise and Support

WW+KN has extensive experience in handling VAT matters related to NATO military procurement. Our team ensures that suppliers and service providers can effectively manage their VAT obligations and benefit from applicable tax exemptions. For more detailed guidance and support, visit our website or contact us directly.

This information helps ensure compliance and maximizes the benefits of VAT exemptions under the NATO SOFA, enabling smoother operations for businesses supplying to NATO forces in Germany.