Domestic and foreign businesses making taxable supplies of goods or services in Germany must register for VAT and report taxable transactions via periodic filings.

A German VAT return must include: 

• Output VAT (collected on sales)
• Input VAT (paid on purchases)
• Net VAT payable or reclaimable (difference between output and input VAT)
• If applicable, a summary of intra-community acquisitions and supplies 

Returns must be filed electronically using the German tax authority’s online portal.

All businesses operating in Germany are required to file an annual return. In addition, businesses with a VAT liability of €1,000-7,500 must file quarterly. Businesses with an annual VAT liability exceeding €7,500 must file VAT returns monthly. 

Newly registered companies must submit VAT returns monthly for two years.

Businesses can typically deduct VAT on goods and services used for business purposes, provided they are correctly invoiced and are not explicitly excluded by German VAT law (such as gifts). Common deductible items in Germany include:

• Office rent, utilities, equipment, and furniture
• Professional services such as accounting and consulting
• Marketing and advertising expenses
• Travel expenses for business purposes, such as flights and trains
• Internet services

Monthly and quarterly VAT returns are due by the 10th day of the month following the period end. For example, January’s VAT return is due by 10 February.

The annual German VAT filing summarising all transactions throughout the year is due by 31 May of the following year.

Any German VAT due must be paid at the same time.

More details on filing frequency and deadlines are below:

The penalty for a late VAT filing in Germany is a charge of 10% of the VAT due, up to €25,000. A late payment can incur interest at 1% per month of the unpaid VAT. There is a four-year statute of limitations for German VAT, except for fraud, in which case it is extended to 10 years. False declarations can trigger audits or criminal charges.

If there is a surplus of VAT inputs over outputs (more VAT incurred than charged), then a German VAT credit arises. In theory, this is due back to the VAT-registered business.  

In the German VAT return, there is a box to tick to apply for a refund, which should be returned within three months. However, this may trigger a VAT audit by the tax authorities. Otherwise, the credit is rolled over to the next filing.