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Updated VAT Taxable Status Certificate for Germany

January 9, 2023

There is a direct correlation between a company's revenue and the amount of VAT it must pay. Thankfully, the German VAT authorities are actively interested in making input VAT registration in other countries straightforward for business owners.

 

How? A newly issued proof of VAT taxability - a VAT certificate.

 

New VAT Taxable Status Certificate in Germany

On November 18, 2022, a new certificate of VAT taxable status was issued by the German Federal Ministry of Finance for businesses domiciled in Germany. We go further into the significance of this new certificate and how it affects domestic and international VAT transactions.

Key takeaways: 

  • The German government has announced that all business owners must obtain a federally granted certificate.

  • Taxpayer registration is shown by this example form (entrepreneur).

  • To claim input VAT in another nation, businesses need this certificate as proof of their VAT taxable status. You may use this certificate as evidence of your German VAT registration to speed up the process of registering for VAT in other countries.

  • This certificate may be obtained by making a formal request to the appropriate VAT authority.

  • Companies in Germany and foreign business owners who have set up shop there through subsidiaries or controlled subsidiaries will need to show proof of certification.

  • VAT 1 TN The sample USt 1 TN is now obsolete and must be replaced by evidence of taxpayer (business owner) registration.

To what extent is the German tax certificate crucial?

Businesses in Germany that want to claim foreign input must now provide the most recent certificate, known as the VAT 1 TN Proof. Business owners in Germany must submit a letter from the Federal Ministry of Finance (BMF) beginning in 2019. Federal states are required to abide by the terms of a BMF letter, which is issued by the Federal Ministry of Finance. The USt 1 TN form becomes mandatory for companies to submit in 2022.

However, new changes were necessary to reduce the likelihood of any disputes arising throughout the international registration and claim procedure. In addition to the above, the following modifications have been made to the certificate:

Proof of registration as a taxpayer (entrepreneur)

The date the entrepreneur registered for VAT is now included in the revisions. Providing this date allows those countries to verify that the VAT registration was really supplied within the refund period, which is a requirement of several third countries. The rest are minor fixes for grammar and style.

Only certificates issued by business owners who are permitted to deduct input tax may be used to recoup value-added tax in a foreign jurisdiction. This certificate will not be eligible for issuance if the business owner solely makes exempt sales that do not qualify for an input tax credit ( 19 paragraph 1 or 24 paragraph 1 UStG).

If a business owner is asked to give evidence of registration by a foreign authority, the German tax authorities will do so without hesitation if the forms in question match the regulation content of the model form USt 1 TN.

In need of German VAT compliance assistance?

Keeping up with changes in the law and the VAT treatment might be difficult unless you have professionals on your side. You must successfully register and claim VAT in Germany, and for that you must choose the solution that is suited for your company.

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