- Understanding VAT Refunds in Germany: For online sellers registered for VAT in Germany, managing VAT refunds is crucial for optimizing cash flow. VAT refunds can be triggered by receiving a refund letter from the German tax authority or by filing VAT returns that show a negative balance, where input VAT exceeds output VAT.
- Responding to VAT Refund Letters: Upon receiving a VAT refund letter, sellers have two options: they can either carry the refundable balance forward to the next filing period or request a direct refund to their bank account by following the instructions provided in the letter. Prompt responses to the tax authority are essential to avoid complications.
- VAT Refunds for Non-Registered Sellers: Sellers not registered for VAT in Germany can still recover VAT expenses through specific refund mechanisms. EU-based sellers can use the EU Refund Claim procedure, while non-EU sellers must submit applications directly to the German tax authority under the EU 13th Directive. Both groups need to adhere to strict deadlines for submitting refund claims to avoid losing their VAT entitlements.
Source VATAi
