German guidance on VAT adjustments

Germany’s Ministry of Finance has provided guidance on the procedures for correcting when too much German VAT been paid.

The new decree, based on a court ruling from the Budesfinanzhof, concerns a transaction when the incorrect tax was paid because of the use of an incorrect VAT rate. The court held that the VAT must first be returned to the customer before an application for a refund from the tax office is processed.

In situations where VAT is incorrectly invoiced by an exempt party, a refund may be applied for by contacting the tax authorities.