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Germany curtails non-resident VAT recovery following tax case

  • VAT
  • 08 June 2014 | Richard Asquith

Germany curtails non-resident VAT recovery following tax case

The German Ministry of Finance has acted curtail an extended VAT recovery option that was thrown open to foreign companies.

German Federal Tax Court helps VAT recovery

The tax ruling in August 2013 opened up the option for non-resident businesses to apply for repayment of German VAT incurred via the regular German VAT return even if a German VAT Reclaim under the 8th VAT Directive should have been used. The case was complicated by the appellant incorrectly having an open German VAT registration.

Federal Ministry of Finance curtails VAT

To prevent an overload of VAT recovery through the German VAT return system, the Ministry of Finance has now issued strict criteria for the application of the above allowance. In essence, companies can only revert to VAT returns if their situation exactly mirrors that of the tax case. In essence, a non-resident may only use its VAT return to claim German VAT incurred that should be applied for through a VAT reclaim if the tax authorities have incorrectly assessed or ignored a correctly submitted reclaim.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.