Contents
- What is an advance VAT return?
- Purpose
- Who has to submit one?
- Exemptions
- Actual or debit taxation?
- Small businesses
- Deadlines
- Submitting the VAT return
- ELSTER certificate
- Permanent extension
- Missing deadlines
- Conclusion
Umsatzsteuervoranmeldung: What exactly is an advance VAT return?
The Umsatzsteuervoranmeldung, or UStVA for short, is an advance VAT return in Germany. It’s a statement businesses prepare for the VAT paid and collected in a specific period. It contains the total input tax paid to suppliers and customer VAT. The difference between the two amounts is known as the Umsatzsteuerzahllast (VAT payable).
Such a payment burden can be positive or negative. If the amount payable is positive, the total VAT received is greater than the total input tax paid.
The difference must then be paid to the tax office. If the payment amount is negative, the tax office refunds the difference. The VAT return must be submitted to the relevant tax office on specific dates.
What is the purpose of the advance VAT return?
VAT is an essential source of revenue for the government. The payments during the year distribute the revenue over the year. The state also protects itself against payment defaults in this way, for example, if a company files for insolvency before the end of the year.
The small instalments can serve businesses well. This avoids being hit with a large tax bill at the end of the year. Another benefit is that businesses receive input tax refunds sooner rather than later.
Who has to submit an advance VAT return?
Kapitalgesellschaften (corporations), Einzelunternehmen (sole proprietorships), and, with a few exceptions, Freiberufer (liberal professionals) are liable for VAT from the first day of their activity (Section 1 (1) UStG). This applies to all supplies against payment and other services. Affected are:
- Corporations, such as the GmbH or UG
- Partnerships, such as the GbR
- Sole proprietorships
- Liberal professionals (please note exceptions such as the medical professions; see below)
All types of businesses, regardless of legal form, must show VAT on their invoices, and an advance return must be regularly submitted to the tax office. There are only a few exceptions to this basic rule.
Who doesn’t have to submit an advance VAT return?
Suppose the tax liability is less than €1,000 in the previous year. In that case, no advance VAT return has to be submitted to the tax office.
Some Freiberufer (e.g., health professionals such as doctors, dentists, physiotherapists, and alternative practitioners) generally don’t have to show VAT on their invoices or submit an advance VAT return. Another exception applies to small businesses classified as Kleinunternehmen.
Sollversteuerung vs. Istversteuerung: Target or debit taxation?
Regarding Sollversteuerung (target taxation), the legal rule is that VAT is due at the end of the advance return period when the service is provided to the customer. The reference date is the invoice date.
If you have selected Istversteuerung (actual taxation), the tax is due at the end of the pre-notification period in which the customer paid.
Kleinunternehmen: Do small businesses have to submit an advance VAT return?
Say you are a Kleinunternehmen (small business) that generated less than €22,000 turnover in the previous year and less than €50,000 in the current year. In this case, you can apply for an exemption from showing VAT on invoices from the Finanzamt (tax office). If the exemption is granted, no advance VAT return must be submitted. The exemption is called the Kleinunternehmerregelung (small business regulation).
Small businesses only have to state their total turnover for the previous and current years in their annual VAT return.
Note: Invoices from small businesses must expressly refer to the VAT exemption in accordance with Section 19 UStG. If no exemption has been applied for, the VAT must be shown on the invoices, and an advance return must be submitted.
What are the deadlines for submitting an advance VAT return?
The registration must always be submitted to the relevant tax office by the 10th of the month following the pre-registration period at the latest (Section 18 UStG). Suppose the 10th of the following month falls on a weekend or public holiday. In that case, the advance return can be submitted on the next working day. Whether the advance return must be submitted monthly or quarterly depends on the tax liability for the previous calendar year.
Vierteljährliche Umsatzsteuervoranmeldung: Quarterly advance VAT return
Suppose the tax liability in the previous calendar year is more than €1,000 but less than €7,500. In that case, it is possible to submit the advance return on a quarterly or quarterly basis (for example, the return for May, June and July could be submitted on 10 August).
Monatliche Umsatzsteuervoranmeldung: Monthly advance VAT return
If the tax liability in the previous calendar year was higher than €7,500, a monthly advance VAT return must be submitted.
Umsatzsteuerjahreserklärung: Annual VAT return
Every company must submit an annual VAT return at the end of the calendar year. This yearly return contains the total amounts of VAT received and input tax paid in the accounting year. It must also be submitted in the event of an exemption from the advance return. If applicable, this is a 0-declaration.
How do I submit the advance VAT return to the tax office?
The advance VAT return must be submitted electronically. Submission in paper form is only possible in cases of hardship and on request. This is done via ElsterOnline. ELSTER is the abbreviation for ELektronische SteuerERerklärung (electronic tax return). It is a platform of the tax offices of the federal states and the federal government.
ELSTER certificate for the advance VAT return
To submit your advance VAT return electronically via ELSTER, you need the so-called ELSTER certificate, a type of electronic signature. This is required so the tax office can clearly assign the advance return to the tax debtor.
To obtain it, you must first register with ELSTERonline. You will then receive a confirmation email and, after around 10 to 14 days, a code by post to log in to ElsterOnline. The certificate is then stored in a password-protected file on your computer.
You will need the following data for the first electronic advance VAT return with ELSTER:
- Tax number
- Address of the tax office responsible for you
- Address of your company
- Registration period
- Input tax and VAT amounts
Submitting the VAT return using accounting software with its own ELSTER interface is more convenient. The invoice data entered during the accounting period is automatically totalled, and the advance return is sent to the tax office.
Dauerfristverlängerung: Permanent extension
Anyone who doesn’t submit the advance VAT return by the 10th of the following month can apply to the tax office for a Dauerfristverlängerung (permanent extension). Suppose someone was liable for VAT in the previous year and submitted a monthly advance return. In that case, the permanent extension must be applied by 10 February at the latest.
If the advance return was submitted quarterly, the application must be submitted by 10 April at the latest. If the permanent extension is approved, the advance VAT return can still be submitted on time one month later. Suppose the tax office doesn’t revoke the permanent extension. In that case, the authorisation is also valid for subsequent years without having to reapply for it.
In addition, a Sondervorauszahlung (special advance payment) must be made and transferred to the tax office by 10 February. The payment is 1/11 of the VAT payable for the previous year. If an advance return is submitted quarterly, a so-called 0 report must be submitted to the tax office instead of the special advance payment.
Consequences of not submitting the advance VAT return on time
If the advance return is submitted late or not submitted at all, a late payment surcharge of up to 10% of the payment amount, up to a maximum of €25,000, is to be expected. If the payment amount is not transferred to the tax office on time, the tax office can charge 1% of the payment amount for each month that has elapsed before the late payment is received. This penalty is known as a Säumniszuschlag (late payment surcharge) in Germany.
Conclusion
To keep your business running smoothly in Germany, it’s essential to understand and manage your VAT obligations.
The Umsatzsteuervoranmeldung (advance VAT return) is a critical part of this process, and it’s important to comply with tax regulations to avoid penalties.
You can simplify this task by using reliable software or getting professional help. This will free up time, allowing you to focus on growing your business.
Remember to stay informed, proactive, and ahead of your VAT obligations. With the right approach, navigating the German tax system can be less daunting and more manageable, leading to smooth sailing for your business.
