Table of Contents
- Introduction
- The Old System
- The New Regulation in Context
- Impact on Businesses
- Pre-requisites for VAT Deferment
- How to Obtain a Deferment Account
- The Importance of a Deferment Account
- The Role of Digital Platforms
- Reverse Charge on Import for VAT Purposes in Germany
- How to Apply for a VAT Number in Germany
- German House of Companies: Your Partner in VAT Deferment
- Concluding Thoughts
Introduction
For businesses importing goods into Germany, the concept ofVAT Deferment is a critical one. VAT, or Value Added Tax, is a common reality for businesses operating in the European Union. It’s a form of consumption tax that is levied on the value added to goods and services at each stage of the production and distribution chain. In the context of imports, the tax is usually paid at the point of importation. However, in Germany, there is an option to defer this payment, leading to the concept of VAT deferment[^1^].
The Old System
Under the old system, companies importing goods into Germany had to pay VAT immediately or within ten days of importation[^2^]. This posed a significant liquidity burden for businesses, as the VAT paid could only be recovered later through periodic VAT returns.
The New Regulation in Context
The new regulation, introduced in the Second Corona Tax Aid Act of 2020, significantly extends the VAT payment deadline^3^. As per the new rules, the VAT payment deadline is the 26th day of the second month following the importation. This change provides businesses with an extended window to pay their import VAT, significantly reducing the liquidity burden.
Impact on Businesses
The new regulation provides significant liquidity advantages for businesses, particularly those with high import volumes^4^. By extending the payment deadline, businesses can manage their cash flows more effectively. They can also use the funds that would otherwise be tied up in VAT payments for other operational needs.
Pre-requisites for VAT Deferment
To benefit from VAT deferment in Germany, there are certain pre-requisites businesses must meet^5^. The most crucial requirement is the establishment of a deferment account. This account is granted by the main customs office upon request and requires certain documentation, such as an extract from the commercial register.
How to Obtain a Deferment Account
Obtaining a deferment account is a relatively straightforward process^6^. Businesses need to submit a request to the main customs office, providing all necessary documentation. Once granted, the deferment account allows businesses to delay the payment of import VAT.
The Importance of a Deferment Account
A deferment account is a critical tool for businesses looking to optimize their cash flow^7^. With this account, businesses can delay the payment of import VAT, freeing up cash for other operational needs. The account also allows businesses to manage their VAT payments more effectively.
The Role of Digital Platforms
In today’s digitized world, many processes, including VAT deferment, can be managed online[^8^]. Digital platforms, like the German House of Companies, provide businesses with easy access to VAT deferment services. These platforms streamline the process, making it quicker and easier for businesses to manage their VAT payments.
Reverse Charge on Import for VAT Purposes in Germany
The reverse charge mechanism is another important concept in the context of VAT deferment[^9^]. Under this mechanism, the responsibility for the payment of VAT shifts from the seller to the buyer of goods or services. In the context of imports, this means that the importer can account for the VAT, rather than the foreign seller.
How to Apply for a VAT Number in Germany
To apply for VAT deferment in Germany, businesses need a VAT number[^10^]. The process of obtaining a VAT number varies depending on the business structure and the nature of the operations. Typically, businesses need to complete a VAT registration form and provide the necessary documentation.
German House of Companies: Your Partner in VAT Deferment
The German House of Companies offers a comprehensive platform for businesses seeking to manage VAT deferment[^11^]. With a fixed yearly fee, businesses can manage their German VAT without setting up a local entity. This platform is particularly useful for businesses looking to import goods into Germany.
Concluding Thoughts
VAT deferment in Germany presents a significant opportunity for businesses to optimize their cash flow and manage their VAT payments more effectively. With the right guidance and support, businesses can navigate the complexities of VAT deferment and maximize their financial potential.
[^1^]:Germany: Additional delay for the payment of import VAT[^2^]:Due date of import VAT: New regulation will apply as from 1 December 2020[^8^]:German House of Companies[^9^]:Reverse Charge Mechanism[^10^]:How to get a VAT number[^11^]:German House of Companies