Together we create optimal processes for your value added tax

As a type of tax that affects all flows of goods and services at all levels of the value chain, VAT can quickly become a cost factor. Errors in VAT processes can have very high negative tax consequences.

Our technical know-how and industry expertise helps you to avoid these errors right from the start. On the other hand, we identify and correct existing errors to ensure smooth future processes. Benefit from our comprehensive support in all value added tax (VAT) related aspects.
 

„Brace yourself for the tax audit in your company. With our attractive consulting services, you are perfectly prepared and well aware of the important issues.”“

Marion Fetzer
Partner, Head of Indirect Tax

Marion Fetzer

Marion Fetzer

Partner, Head of Indirect Tax

Certified Tax Advisor

Thorsten Went

Thorsten Went

Partner Indirect Tax, Head of Digitalisation Tax

Certified Tax Advisor

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We will advise you on the following topics, among others:

  • VAT risk management:
    • VAT tax compliance management (TCMS) 
    • VAT review 
    • Employee training
  • VAT declaration: advance return, annual return, EC sales list and Intrastat report 
  • Tax advice abroad: e.g., chain transactions within the supply chain, tax liability 
  • Tax exemption: e.g., pro rata calculation and optimization of input tax deduction 
  • VAT group
     
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Complex legal situation with regard to VAT

Internationalization and increasingly dynamic markets are making VAT law ever more complex. Both the European Court of Justice’s (ECJ) and national case law have an impact on companies.

Furthermore, the tax authorities provide their own interpretation, which is fundamentally binding. However, this partly contradicts both the specialist literature and, in particular, ECJ case law. The constantly changing regulations make it difficult to keep an eye on all the details. Incorrectly claimed input VAT amounts or unpaid VAT can quickly lead to considerable payment obligations to tax authorities or legal disputes with business partners.

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VAT risk management for your tax audit

VAT law involves a number of risks that can be effectively eliminated. 

Prepare yourself optimally with our VAT review

Our VAT review aims to minimize any risks so that the VAT audit proceeds without any significant adjustments. During the VAT review, our experts record your company’s individual VAT-relevant facts and subject them to a detailed analysis. Our aim: VAT should not affect profit or loss or lead to increased costs.

Have you missed the VAT review and are you already facing a VAT audit? We advise and support you during the tax audit, right up to the result and beyond.

  • We represent you in legal disputes 
    If the results of your tax audit reveal any anomalies and you need legal advice, we will represent you in appeal proceedings and tax court litigation.
     
  • We support you with the disclosure pursuant to Art. 153 AO 
    If, for example, our VAT review identifies any incorrectly declared VAT matters, we will support you in disclosing them and correcting the declaration in accordance with Art. 153 AO (German General Tax Code). In doing so, we act in close coordination with our lawyers specialized in the law regarding fiscal offenses.
     
  • From VAT compliance advice to VAT quick checks
    Our experts will also provide you with advice on your VAT compliance in Germany and abroad, VAT IT system reviews and initial assessments of your VAT situation in the form of VAT quick checks.
     
  • Regular invoice checks for input tax deduction 
    Every day, you receive numerous invoices. However, input tax deduction is only granted if the invoice requirements are met. We support you in checking them and setting up the right processes to ensure that your workflows are checked.
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VAT declaration – four relevant aspects

Filing the annual VAT return for the previous calendar year is one of your company's mandatory tasks. It is basically a summary of the advance returns regularly submitted during the year.

However, the Federal Statistical Office is also interested in intra-European deliveries of goods relevant for VAT purposes, which must be declared in the Intrastat report. In addition to intra-European services, these deliveries of goods must also be declared to the Federal Central Tax Office (BZSt) as part of the EC sales list. In the following, we briefly explain what the VAT declaration is basically about.

Do you wish to receive specific support? Please feel free to contact us.
 

  1. Advance VAT return to be filed with the tax office 
    From a certain amount of VAT payable, your company must generally file monthly or quarterly advance VAT returns with the tax office. This involves filling in numerous codes correctly on the relevant forms and calculating the VAT on the sales generated in the relevant period. At the same time, you deduct the deductible input tax for your company. The difference between the calculated VAT and the deductible input tax results in a VAT payment to the tax office or a refund for your company.
  2. Annual VAT return to be filed with the tax office 
    You submit the VAT return once a year in addition to the advance returns. The return summarizes all sales for the previous calendar year and contains further information, such as information on free gifts. With this annual return, you confirm the information from the monthly or quarterly advance returns and make any corrections. The tax office uses this declaration to check and settle your company’s VAT liability for the entire year.
  3. EC sales list to be filed with the German Federal Central Tax Office (BZSt) 
    For the cross-border movement of goods and services, an EC sales list must be prepared and submitted to the BZSt. The list must include intra-Community deliveries, other services and intra-Community triangular transactions separately in relation to the recipients’ respective VAT identification numbers (VAT ID numbers). As part of the combat against VAT fraud, this data is used by the authorities for control notifications, in particular between EU countries.
  4. Intrastat declaration to be filed with the Federal Statistical Office 
    Another aspect in connection with the VAT declaration is the Intrastat declarations companies must file if they trade in goods between Germany and other EU member states. This cross-border movement of goods is recorded by the Federal Statistical Office in the intra-trade statistics. The Intrastat declaration must therefore include the goods tariff number and, since January 2022, the VAT ID number (or VAT ID) of the EU trading partner as well as other detailed information. The data from the intra-trade statistics are also used in addition to the EC sales list in order to combat fraud.

Everything you need to know about VAT

Does your company operate worldwide? So do we!

Benefit from our cross-border tax consulting services through our global Baker Tilly network in 145 countries with 41,000 employees.

Our experts will assist you with all international VAT issues. If you wish, these services can be provided via the existing German engagement.
 

Some sectors offer tax-free services. In some cases, these do not entitle you to deduct input tax from the purchased services. In addition to the classification of tax-free services – with or without input tax deduction – it is sometimes very time-consuming to directly allocate input transactions to output transactions.

In addition to the direct allocation to taxable output transactions, which entitle to full input tax deduction, there must also be a direct allocation to tax-free output transactions, for which input tax must generally not be taken into account. When optimizing input tax deduction, the VAT option, i.e., the option to pay VAT on actually tax-free transactions offers a good opportunity to increase the input tax deduction under certain conditions. The calculated pro rata rate for input tax deduction is only applied to the remaining, non-allocable “input tax pool”. 

We will show you how to take advantage of a number of benefits, such as the optimum scale for each specific case and how to properly document the entire procedure.
 

A consolidated tax group is a “group” in which several legally independent group companies are combined into a single unit and treated as if they were a single company for tax purposes.

A tax group is possible for the following tax areas: for corporate income tax with trade tax and for VAT. 

A consolidated tax group for income tax purposes does not necessarily have to lead to a consolidated tax group for VAT purposes and vice versa. As a consequence of the VAT group, the transactions between the companies in the VAT group – the so-called internal transactions – are not relevant for VAT purposes. 

The VAT group is created by law, which means that its existence may be overlooked in a corporate group, or a company may not be taken into account. Nevertheless, there are numerous structuring options for including or excluding a company in the VAT group. A VAT group may offer advantages but may also have disadvantages in some cases. 
Benefit from our experience in VAT groups and let us together find the best solution and the most suitable approach for your company.