Can I claim input tax from abroad?
July 6, 2022 | 40,00 EUR | answered by Roberta Schlattmann
Dear tax advisor,
My name is Emilia Schottmann and I run a small business in Germany. Lately, I have been conducting more transactions with foreign companies and I am wondering if I can claim the input tax from these foreign transactions.
So far, I have only worked with German suppliers and have been able to deduct the input tax without any issues. Now, I am faced with the challenge of not being sure if and how I can properly pay the input tax from abroad. I have tried to gather information on the internet, but the information there is often unclear and contradictory.
My concerns are that I don't know if I can deduct the input tax from foreign invoices and if there are certain requirements I need to meet. Additionally, I am worried that I might make mistakes and risk high back payments or penalties.
Could you please explain to me under what conditions I can claim the input tax from abroad? Are there specific forms or procedures I need to follow? And what steps do I need to take to ensure that I correctly pay the input tax?
Thank you in advance for your help.
Sincerely,
Emilia Schottmann
Dear Mrs. Schottmann,
Thank you for your inquiry regarding claiming input tax from foreign transactions. It is understandable that you may feel unsure when it comes to this topic, as the regulations can often seem complex and confusing. I would like to explain in detail under what conditions you can claim the input tax from abroad and what steps you should take.
In general, as a business owner, you can claim the input tax from transactions with foreign companies, provided that they provide taxable sales in Germany. This means that the foreign suppliers must have a VAT identification number and the services they provide to you must be subject to tax here.
In order to claim the input tax from abroad, it is important that the invoices from foreign suppliers contain all the necessary information. This includes, among other things, the VAT identification number of the supplier, your own VAT identification number, the net amount, the VAT rate, the separately stated VAT, and a clear description of the service provided.
It is also important that you correctly declare the input tax in your VAT return. To do this, you should carefully review the foreign invoices and enter the input tax amounts in the appropriate line of your VAT return. Also, be aware that it may be necessary to consider a possible input tax refund in your input tax deduction.
It may also be helpful to consult with your tax advisor or an expert in international tax law to ensure that you follow all the necessary steps correctly. In some cases, it may also be advisable to take care of a VAT return abroad and possibly apply for an input tax refund there.
In summary, claiming input tax from foreign transactions is indeed possible, but there are some peculiarities and rules to consider. With the right preparation and support, however, you should be able to correctly declare the input tax and avoid any potential errors.
I hope that this information is helpful to you and I am available for any further questions.
Best regards,
Roberta Schlattmann
