New § 18f UStG states that the tax authorities may, with the taxpayer's consent, require security to be posted before refunding VAT pursuant to such a return. In order to guard against refunds obtained on false pretences, firms can now be required to post security in order to receive refunds with respect to the period covered by a monthly or quarterly VAT return. Where the above requirements are met with respect to several entrepreneurs in the chain of supply, they are all jointly and severally liable.ġ.3 Posting of security for refund of input VATĮntrepreneurs are in principle entitled to a refund where creditable input VAT incurred exceeds output tax invoiced.

the recipient of the supply was aware of these circumstances at the time of contracting for the relevant supply.

the issuer of the invoice (generally, the supplier) fails to remit the invoiced VAT either in accordance with a premeditated intention not to remit or because of intentional or grossly negligent inability to remit, and.

New § 25d UStG makes the purchaser of goods or services liable for VAT separately shown on the related invoice where: The new legislation seeks to combat so-called carousel frauds by imposing VAT liability on the recipients of supplies under certain circumstances. below.ġ.2 Purchaser's liability for supplier's wrongful failure to remit VAT The major provisions of the VAT Anti-Fraud Act are described in sec. 1.2 ff. Finally, the tax authorities have been given authority to conduct no-warning on-site VAT inspections that are unrelated to a pending field audit. Moreover, monthly (as opposed to quarterly) filing of VAT returns has been made the norm for newly registered firms for the period from initial registration until the end of the calendar year that follows the year of registration, irrespective of VAT liability. The new legislation also defines new tax crimes and administrative offences to aid in the fight against organised tax fraud.

The risk of tax revenue shortfalls is reduced by making refunds of excess creditable VAT contingent on the posting of security and by extending the scope of secondary VAT liability. To curtail such practices, the VAT control and security systems are tightened. The VAT Anti-Fraud Act is aimed at schemes involving wrongful credit (deduction) of input VAT, in particular fraudulent practices by which input tax credits are claimed for VAT that is invoiced, but never paid. Non-VAT aspects of these bills are discussed in articles in KPMG German News no. These changes are contained in the VAT Anti-Fraud Act ( Steuerverkürzungsbekämpfungsgesetz) and the 2001 Tax Amendment Act ( Steueränderungsgesetz 2001). Important changes were made to Germany's VAT law (officially the Turnover Tax Act or Umsatzsteuergesetz – UStG) with effect from 1 January 2002.

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German vat act