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Entrepreneurs resident outside of Germany who want to get a refund of German VAT paid in 2005 need to hurry up if they want to beat the 30 June deadline. Expatica's tax accountant tells you what you have to do.Entrepreneurs that are resident outside of Germany and want to get a refund of German VAT paid in 2005 need to hurry up: 30 June 2006 is the deadline for filing an application for a refund of 2005 German VAT. The same is also true for German based entrepreneurs that apply for a refund of foreign VAT.
Value Added Tax (Umsatzsteuer) is a tax levied at every economic stage from the manufacturer to the retailer and is ultimately borne by the end consumer. Depending on the kind of product or service, German VAT of 7 or 16 percent is charged.
Entrepreneurs registered in Germany can deduct the paid VAT from the VAT they charge to customers. Therefore, VAT is only a transit item for those entrepreneurs.
For entrepreneurs that are not registered in Germany because they are not resident in Germany and don't achieve revenue in Germany, VAT paid in Germany is no transit item in a first instance. However, Germany and all other EU countries are bound by the 8th EU regulation to repay VAT paid by a foreign entrepreneur under certain circumstances.
This 8th EU regulation has been transferred into German law with Art. 18 sec. 9 Umsatzsteuergesetz (UStG, German VAT code).
According to Art. 18 sec. 9 UstG, entrepreneurs that are not resident in Germany and that do not achieve revenue that is liable to German VAT can apply for a refund of VAT paid in Germany.
Primarily, this concerns entrepreneurs who paid travelling and trade fair costs in Germany in 2005. But it is also possible for those foreign entrepreneurs who bought i.e. material and equipment, consulting and telecommunication services etc. in Germany.
The refundable VAT amount depends on the residency of the entrepreneur, as there are differences between those resident in another EU country and those resident in a so called third country.
EU residents can claim for a refund of German VAT for a period of at least three consecutive months up to a calendar year. The refundable VAT needs to amount to EUR 200 or more (EUR 20 or more if the application period is the calendar year).
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