Germany: Guidance on VAT corrections with retroactive effect

Germany: VAT corrections with retroactive effect

The German Ministry of Finance (BMF) issued guidance that confirms that corrections to invoices may be made that will be effective retroactively to the date of the originally issued invoice. The guidance is viewed as giving legal certainty in certain circumstances regarding value added tax (VAT) treatment.

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The guidance was issued in response to case law from the German Federal Tax Court (BFH) and Court of Justice of the European Union (CJEU), but with a narrow interpretation. It also includes an example from the VAT application decree. Under the guidance, a retroactive invoice correction can be achieved, and interest on back payments of VAT because of an improper purchase invoice can be avoided. 

KPMG observation

Businesses need to carefully examine their purchase invoices with regard to formal and material legal aspects because not all incorrect invoices are capable of being corrected with retroactive effect.
 

Read an October 2020 report [PDF 418 KB] prepared by the KPMG member firm in Germany


Other recent VAT developments that may affect businesses in Germany include the following items:

  • Input VAT deduction for extending a municipal road (CJEU, judgment of 16 September 2020—case C-528/19)
  • Introductory guidance on the changed requirements in the case of intra-Community supplies of goods (BMF, guidance of 9 October 2020)
  • Postponement of the due date for import VAT (BMF, guidance of 6 October 2020)
  • The term “work supply” (BMF, guidance of 1 October 2020)
  • SAP S/4HANA—An opportunity for tax departments (KPMG Whitepaper)

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