VAT returns are fraught with potential errors. From incorrect tax rates to faulty intra-Community supplies – we highlight the most common mistakes and how to avoid them.
VAT: The Underestimated Risk
VAT is the highest-yielding tax in Germany and at the same time one of the most error-prone. Incorrect VAT returns can lead to additional payments, interest pursuant to § 233a AO and, in the worst case, criminal consequences.
The Most Common Errors at a Glance
1. Incorrect Tax Rate
The standard rate is 19 per cent, the reduced rate 7 per cent (§ 12 UStG). The distinction is not always straightforward. Typical disputes involve the differentiation between supplies of goods and services in the catering industry and the varying treatment of food products depending on the degree of processing.
2. Defective Invoicing
An invoice must contain the mandatory particulars set out in § 14 Abs. 4 UStG for the recipient to claim an input tax deduction. Common deficiencies include missing or incorrect tax identification numbers, imprecise descriptions of services and missing dates of supply.
3. Intra-Community Supplies
Intra-Community supplies are exempt from VAT under § 4 Nr. 1b UStG in conjunction with § 6a UStG. However, the exemption requires both documentary evidence and supporting records. Without proper documentation, the supply faces retroactive taxation at 19 per cent.
4. Reverse Charge Procedure
Under the reverse charge procedure pursuant to § 13b UStG, the recipient of the supply owes the VAT. Incorrect application regularly leads to double taxation or missing tax collection.
5. Input Tax Deduction for Mixed Use
Where goods are used for both business and private purposes, the input tax deduction must be apportioned under § 15 Abs. 4 UStG. The apportionment method must be appropriate and justifiable.
Timing Considerations
Meeting Deadlines
VAT returns must generally be submitted by the 10th day following the end of the reporting period (§ 18 Abs. 1 UStG). A permanent extension of the deadline under § 46 UStDV grants an additional month.
Cash Basis versus Accrual Basis
Businesses with prior-year turnover of up to 800,000 euros may apply for cash basis accounting under § 20 UStG. Under the cash basis method, VAT only becomes due upon receipt of payment.
Digital Requirements
Since 1 January 2025, businesses must generally be able to receive electronic invoices in a structured format. The full obligation to issue electronic invoices is being introduced in phases.
Conclusion
Correct VAT handling requires specialist knowledge and meticulous processes. At compleneo, we support you with professional ongoing bookkeeping and ensure that your VAT returns are submitted accurately and on time.
