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German VAT question.

German VAT question

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I have a quick question re German VAT/ EU VAT. Just got a German client who has signed up a contract with a new German company and has just been invoiced for the first time (initial sale above the above the €22k VAT threshold) with German VAT on shown on it. The German co has applied for VAT registration and does not not yet have VAT number. The question is can the seller of the service invoice with VAT showing on the invoice? My experience with UK VAT is that if a company is not VAT registered yet (& without VAT number) the invoice can not explicitly show VAT. The supplier can reissue the invoice later to cater for VAT if need be.

*This question has been edited to include additional amends.*

Replies (16)

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RLI
By lionofludesch
21st Oct 2021 17:44

"The German co has applied for VAT registration and does not have a VAT no?"

Is that the question ? If not, what is ?

Mehrwertsteuer, by the way. Or MwSt for short.

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Replying to lionofludesch:
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By Hugo Fair
21st Oct 2021 18:22

I got stuck before that extract:
* Just got a German client (let's say 'A') who has signed up a contract with a new German company (let's say 'Z') and has just been invoiced for the first time
... so does this mean that 'Z' has issued an invoice to 'A'?

* And if it is 'Z' that has applied for VAT registration, then what is relevance of that to 'A' ... OP's client?

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By VATs-enough
21st Oct 2021 18:20

Is it just me, or does any of that make sense?

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Replying to VATs-enough:
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By Leywood
21st Oct 2021 18:54

no, I got stuck at the same point as Hugo.

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Replying to Leywood:
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By Paul Crowley
21st Oct 2021 19:00

There is no question that I can identify

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By Jupiter Accountants
21st Oct 2021 19:11

Apologies lost internet connection whilst typing .....i have asked the support team to add my edits to the question. In summary here is the question:

Can a German supplier of services issue a VAT invoice (with VAT explicitly charged) if the company is not yet VAT registered? The company is waiting for VAT registration application.

My understanding is that a VAT invoice can only be issued if the company is VAT registered otherwise this is VAT fraud. Any comments with references to the EU/German legislation would be greatly appreciated....

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By Jupiter Accountants
21st Oct 2021 19:11

Apologies lost internet connection whilst typing .....i have asked the support team to add my edits to the question. In summary here is the question:

Can a German supplier of services issue a VAT invoice (with VAT explicitly charged) if the company is not yet VAT registered? The company is waiting for VAT registration application.

My understanding is that a VAT invoice can only be issued if the company is VAT registered otherwise this is VAT fraud. Any comments with references to the EU/German legislation would be greatly appreciated....

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Jason Croke
By Jason Croke
21st Oct 2021 19:34

Like everyone else, totally lost.

What is being supplied, goods or services?
Is this transaction taking place in Germany or somewhere else?
Which entity is not VAT registered?

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By Jupiter Accountants
21st Oct 2021 19:17

Supply of taxable professional services between two German companies. Supplier not yet VAT registered (but applied for VAT registration). Customer VAT registered.

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Replying to Jupiter Accountants:
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By Hugo Fair
21st Oct 2021 20:29

So is your question unrelated to whether VAT is actually in play (based on nature of the sale and the location of buyer & seller)?

Are you in fact simply asking whether a company that has not yet completed VAT registration (even though the application to do so has been made) is allowed to charge VAT on one of its sales invoices?

If so, whilst I have no knowledge of VAT regs in Germany (this being a UK site), it would seem unlikely ... but of course Jason may want to check further detail (such as whether delivery of product/service will only take place after VAT registration is completed)?

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By David Ex
21st Oct 2021 23:40

Might be a silly question but why is a German company engaging a UK based accountant? Are you a specialist in taxes in EU countries?

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Jason Croke
By Jason Croke
22nd Oct 2021 07:41

I don't know the answer for sure, but, the question seems to be "can the supplier charge VAT, even though they are not VAT registered?" and I think the question answers itself.

How can the supplier charge VAT when it doesn't have a VAT number? It cannot issue a valid VAT invoice without a VAT number. How can the supplier pay this VAT over to the German tax office when it has no VAT number? What if the German tax office refuses the VAT number? What then?

In the UK, the guidance from HMRC is that, whilst awaiting a VAT number, the supplier can either issue a net only invoice (eg £100) and then follow it up with a VAT only invoice (£20) once the VAT number is issued or, the supplier can issue a gross invoice (£120) that does not show VAT or mention VAT and then when the VAT number is issued, the supplier issues a proper VAT invoice showing net, VAT, gross (£100+£20=£120) so that the customer can then reclaim VAT.

As UK VAT law follows EU VAT law, I would imagine the German VAT rules will mirror that of the UK/EU, certainly the EU legislation is clear that can't charge VAT if you are not VAT registered, I doubt Germany would have their own domestic rules that allows traders to charge VAT whilst not being VAT registered.

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By Jupiter Accountants
26th Oct 2021 09:50

A German VAT expert has confirmed that a German company which is not VAT registered can charge VAT but the recipient cannot claim it – funny ha!

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Replying to Jupiter Accountants:
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By Tax Dragon
26th Oct 2021 10:01

Jupiter Accountants wrote:

A German VAT expert has confirmed that a German company which is not VAT registered can charge VAT but the recipient cannot claim it – funny ha!

IIRC "funny ha!" is German for "until the [VAT] number is issued".

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Replying to Tax Dragon:
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By Hugo Fair
26th Oct 2021 13:18

Could well be ... although my guess was that recipient can't claim input VAT for the rather simpler reason that, irrespective of what seller's invoice says, there is no VAT amount actually being charged - even if the price is 'higher than normal'.

Only when the seller's VAT registration is completed (and a number issued) are they capable of charging VAT (and indeed accounting for it to the tax authorities) ... and so only then can the recipient consider claiming it (supported by a new invoice showing the number).

On second thoughts, that's what you said ... only more briefly & with humour!

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Replying to Hugo Fair:
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By Tax Dragon
26th Oct 2021 15:51

Hugo Fair wrote:

On second thoughts, that's what you said ... only more briefly & with humour!

Most of what I say in here is a joke.

Fortunately, I'm so unfunny that a lot of the time I get away with it.

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