Reclaiming VAT in Germany is an altogether a different ballgame. Learn how you can do it.
Many companies engaging in cross-border trades nowadays are aware of the fact that they can reclaim the VAT paid in various countries of Europe and few countries in Asia-Pacific. The practice has been in place ever since EU was formed, but there has always been a dearth of awareness. VAT is meant to be paid by the residents of the country, not by the professionals who visit there for business purpose. Precisely talking, a company can recover most part of the VAT paid pertaining to accommodation, transportation, communications, meetings, seminars, import, aviation, etc,. from the host country. A set of procedure is attached with the reclaiming; often a tiresome timeline is involved. The lack of awareness and proper expertise has thus resulted in uncountable amount of money being left unclaimed by companies every year.
Many countries require partner nations to sign a FTA in order to allow the citizens from those nations to claim refunds on their VAT paid. It is a no-brainer that India hasn’t signed Free Trade Agreements (FTAs) with a lot of countries; and that proves to be a hindrance for the businesses that want to reclaim VAT paid in the countries that necessarily require some sort of reciprocity on the part of the claimant’s nation. While a few nations do not require a FTA (like Britain, which allows tax-back to businesses from any nation), there are many that do not allow VAT reclaims if a reciprocity has not been established beforehand between the countries. Of course there are certain guidelines and procedures that help you do away with the FTA compulsion and allow you to file for VAT returns and claim your spends, but this requires assistance from the local VAT experts who have been aiding companies with building VAT-recovery strategies and claiming tax-backs for long.
Germany, in particular, has very stringent set of rules and regulations that even the experienced of professionals in the field of tax reclaiming can be seen scratching their heads in despair. The country has a 19% VAT criteria and it offers refundable, reduced VAT rates on hotels while the VAT paid on restaurant meals, business conferences, travel, and training courses is refundable. In addition to this, cost incurred on telecommunication, marketing, consultants’ fees, lawyers’ fees, and marketing are completely tax-exempted. VAT paid on petrol, diesel, and exhibitions or trade fairs are refundable with the application of some restrictions. Now, Germany is not very lenient on the companies that are from a country that doesn’t have a reciprocity agreement with it. An Indian company can still file for VAT returns, but the process is rigorous and complex.
There are many companies and professionals in today’s world that can help you with your international VAT reclaim, but getting tax back from Germany is a tedious task, I must say. The complete documentation process, invoicing, verification, and the waiting period is so detailed, and additionally, cumbersome in Germany that only the most experienced and the best-of-the-best can manage to pull your taxes out from the country; it’s next to sneezing with your eyes open! This is also the reason not many businesses are interested in reclaiming VAT spent in Germany.
Extensive experience with proper knowledge of the laws, rules, and regulations in addition with the right approach has the key to every problem arising in the field of VAT reclaim. The parent company of CB VAT India, United Cashback, based out of Switzerland, is one of the oldest companies in this business. Over three decades of expertise in this field makes CB VAT India a pioneer in the art and science of VAT reclaim across the globe; Germany being no exception to its scope. With physical presence in almost every geographical location where claiming VAT expense is possible, we have developed an expertise like nobody else!
We have dedicated tax processors in Germany having experiences of over 22 years who have researched and found out how certain Indian companies having a particular structure and a certain relationship with companies in Germany can be eligible to apply for tax-back. The companies just need to prove their eligibility in order to proceed with their application, which our experts help them with, of course!
Reclaiming VAT in Germany is not impossible after all, as you see!