Contents
- What is a VAT ID (USt-IdNr)?
- Who needs a USt-IdNr?
- What does the USt-IdNr look like?
- Where can you apply for the USt-IdNr?
- Where does the USt-IdNr appear?
- What is meant by intra-Community acquisition?
- FAQ
- Examples of how to use a VAT number
- Summary
- Want to know more about accounting in Germany?
VAT-ID numbers (USt-IdNr) in Germany: The Basics
What is the Umsatzsteuer-ID?
The VAT ID is short for value-added tax identification. In Germany, this ID number is known as the Umsatzsteuer-ID. You might also see it abbreviated as USt-ID, USt-IdNr. or UID (in Austria).
It’s a separate tax number. Based on this, every company in the European Union can be uniquely identified. The VAT ID no. is mainly used for B2B transactions within the EU.
Who needs a USt-IdNr?
Entrepreneurs who participate in the trade of goods and services between EU member states need a VAT registration number, except for companies that use the Kleinunternehmerregelung (small business regulation).
Kleinunternehmer (a German term for small businesses) sell their goods free of VAT anyway.
What does the USt-IdNr look like?
In Germany, the USt-IdNr (VAT ID number) begins with the abbreviation DE, followed by nine digits. It, therefore, has the structure DE123456789.
The structure is similar in other EU member states. The VAT number begins with the EU country code, followed by up to twelve alphanumeric characters, depending on the country.
Where can you apply for the USt-IdNr?
In Germany, you can apply for your VAT registration number free of charge at the BZSt (federal central tax office). You can even submit this application online! Before the BZSt issues a VAT registration number to a Kleinunternehmer (small business), it requires the approval – known as Sondersignal which translates to special signal – of your local Finanzamt (tax office).
Where does the USt-IdNr appear? Where does it have to be on the invoice?
The VAT-ID number must appear on invoices and in the Impressum (imprint/legal disclosure) of a company’s homepage. On invoices, it is usually found below the address and telephone number or email address of the person invoicing. However, it can appear elsewhere. It must be complete, correct, and recognisable as a VAT ID.
According to §14 a para. 1 UStG, an invoice for an intra-Community acquisition must state both the VAT ID number of the supplier and that of the recipient. If one of the numbers is missing, the book evidence required for an intra-Community supply (§ 17c UStDV) for claiming VAT exemption is deemed not to have been provided. In addition, this invoice must contain the note “tax-exempt intra-Community supply” or “tax-exempt according to § 4 no. 1b in conjunction with § 6 a UStDV”. V. m. § 6 a UStG”.
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What is meant by intra-Community acquisition?
Intra-Community acquisition (innergemeinschaftlicher Erwerb) is governed by Section 1 of the UStG (turnover tax act). The following conditions must be met for an intra-Community supply or service to exist:
- For good, the delivered items must enter the country of destination – i.e. another EU member state.
- Buyers must acquire the goods for their business. To prove this, the buyer must inform the seller of his VAT registration number.
- The seller must not be a Kleinunternehmer (small business operator or trader) because such traders are exempt from VAT.
- The goods or services must be within the scope of the seller’s business activity. This is proven by making a tax-exempt delivery and informing the buyer of his VAT registration number.
The country of destination principle applies to intra-Community transactions in goods and services. This means that the recipient pays tax on the delivery or service at the local VAT rate. The basis of assessment is the net payment made to the seller.
Delivering goods intra-Community
Supplying to another EU country is VAT-exempt if the recipient is an enterprise and the item is for business purposes. The delivered goods must physically reach the country of destination. In Germany, a Gelangensbestätigung, which means “confirmation of arrival” in English, serves as proof of this. The USt-IdNr. (VAT registration number) proves that the recipient is a business enterprise.
Delivering services intra-Community
The same applies to services as to the supply of goods. The recipient of the service proves it is a business by using this VAT registration number. The service is taxed at the place that issued the recipient’s VAT registration number. This procedure is also called reverse charge and means the reversal of tax liability (§ 13 UStG). In this case, the invoice must state:
Steuerschuldnerschaft des Leistungsempfängers (tax liability of the recipient of the service),
or something similar.
FAQs about the VAT ID in Germany
How can I check a VAT ID?
The invoicing party must ensure that the VAT IDs of their customers are valid. At the same time, you should document the check as proof and keep it in a traceable manner in case of discrepancies! To check this, there is a confirmation procedure that you can use to check a foreign VAT ID yourself online on the website of the BZSt (federal central tax office). To do this, enter your own VAT registration number, which country you want to check and the VAT registration number of your business partner. A second confirmation procedure for the validity of a VAT ID is offered by the European Commission under the name VIES, short for VAT Information Exchange System (in Germany, this is known as MWSt-Informationsaustauschsystem or MIAS for short).
What happens if the VAT number is wrong?
If the recipient of your invoice has entered an incorrect VAT registration number, you may have to pay the VAT instead. The worst case scenario is that you could even be prosecuted for using unauthorised tax advantages. As a vendor or supplier, you can’t claim that you simply trusted the accuracy of your customer’s information. The standard here is the “Sorgfalt des ordentlichen Kaufmanns” (“due diligence of a prudent trader”). This duty of care is seen as not being met if you fail to check the corresponding VAT identification number in advance. This is why you should be able to prove that you have checked it. This is the only way you can convince the tax office that you’ve done your due diligence.
Can foreign entities check a German VAT ID with the confirmation procedure?
No, the Bundeszentralamt (federal central tax office) only offers verification services for German businesses.
Are private individuals in the EU exempt from VAT?
Generally, there are no VAT exemptions, but there are exceptions to this rule. Normally, you must show German VAT on your invoice for supplies and services to private individuals in other EU countries. An exception is the so-called Versandhandelsregelung (mail-order regulation) as per § 3c UStG. For example, if a company, such as an online shop, increasingly delivers to private individuals in non-EU countries, this supplier must pay VAT in the country of the purchaser. To do so, the company must register for VAT in the countries to which the deliveries are being made. Each country determines for itself from which scope of delivery the VAT falls back on the supplier.
Who is liable for VAT?
The tax liability arises when the invoice is issued but no later than in the month following the purchase (§ 15 para. 1 UStG). However, it is not the seller but the buyer who bears the VAT liability. The buyer taxes the delivery or service as an intra-Community acquisition and pays the VAT on the payment to the competent tax office. Then the buyer can then deduct this again as input tax.
Why do I need a Zusammenfassende (recapitulative statement)?
If you carry out intra-Community transactions, whether as a seller or buyer, you must submit a recapitulative statement on these transactions with the Umsatzsteuervoranmeldung (advance VAT return). This statement is known as the Zusammenfassende (ZM) in Germany. The ZM is submitted electronically via the tax authorities’ Elster portal. Unlike the deadline for submitting the advance VAT return, there is a reporting deadline of the 25th of the following month.
What is a One Stop Shop for electronic services?
Businesses now no longer have to register for VAT in all the EU Member States, where they have customers to file their returns and declarations. Instead, they can use the One Stop Shop (OSS). You can register for the MOSS procedure free of charge on the BZSt portal and submit your tax returns and declarations under this special scheme in Germany. You can find out more about the OSS procedure here.
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Examples of how to use the VAT ID
The following examples are intended to illustrate how the VAT-ID number is handled in practice.
Delivery of goods to a French company
Suppose you deliver computers to a company in Paris. You and your Parisian customer each have a domestic VAT number from Germany and France, respectively.
The delivery is tax-free in Germany as an intra-Community delivery – if the following conditions are met:
- Your VAT registration number and the French VAT ID of the customer are stated on the invoice.
- The invoice contains a note about the tax-free intra-Community delivery. In non-German-speaking countries, you would make this note in the national language of the service recipient; corresponding translations can be found on the Internet or at the IHK (chamber of industry and commerce).
- You enter the assessment basis (net remuneration) in line 20 of the advance VAT return (UStVA) and column 2 of the recapitulative statement (ZM).
For confirmation, archive the invoice, the customer’s confirmation of receipt and a forwarding agent’s certificate or the consignment note.
Providing services to a client in Austria
You are a management consultant and advise a client in Austria. In this case, your service is also an intra-Community, tax-exempt service. Things proceed as follows:
- On your invoice, you list your own VAT-ID number and the verified VAT-ID number of your client.
- The invoice contains the note “Steuerschuldnerschaft des Leistungsempfängers” (“tax liability of the service recipient”) or “Reverse Charge.”
- Upon completion of the transaction, the service is deemed to be rendered in Austria and taxable. You cannot show a confirmation of receipt here; this is only available for physical goods.
- For proof, archive the invoice.
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The Umsatzsteuer-ID (VAT-ID), in a nutshell
- The VAT ID is required for intra-Community transactions between companies (B2B).
- If you, as a business, deliver or provide services to a company in another EU member state, these are tax-free.
- The purchaser – your business customer – must pay VAT on the payment in his country. This tax can be deducted as input tax.
- Invoices for intra-Community deliveries and services must meet special requirements. They must always contain the VAT registration number of both the supplier and the purchaser and a reference to the “tax-free intra-Community supply.”
- You can apply for a VAT registration number at the BZSt (federal central tax office).
- The VAT for intra-Community transactions is declared in a separate recapitulative statement (Zusammenfassenden or ZM).
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