VAT Compliance

General procedure

All outgoing and incoming items must be accounted for within the framework of preliminary VAT returns regarding German VAT.

Outgoing items must be separated into turnover taxable at 7% or 19% VAT and tax-free items, for example an export to a third country or an intra-community delivery to another EU country. In connection with this the business transactions are listed in the bookkeeping with information regarding fee, tax rate or tax exemption, date of invoice and recipient or issuer of the invoice. The VAT amount payable minus pre-tax must be transferred to the tax office at the same time as the preliminary VAT return is transmitted.

There must be a correct calculation according to VAT law for a pre-tax deduction of the incoming items. A pre-tax deduction is only possible when the service and correct invoice has been received or when the invoice has been paid and a correct invoice received. Import VAT can also be claimed back for in preliminary VAT returns. The company must archive evidence or copies of the incoming and outgoing invoices for ten years and only present them on demand by the Germany tax authorities.

An annual VAT return must be filed in addition to the preliminary VAT returns, which summarizes the preliminary VAT returns. Furthermore, foreign companies which are VAT registered in Germany must provide further information.

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Summary of the most important points

  • All outgoing and incoming items must be reported within the preliminary VAT return.
  • The payment deadline for VAT is the same as for the transmission of the preliminary VAT return.
  • An annual VAT return must be filed in addition.