043. VAT Refunds To Non-Resident Entrepreneurs

KPMG Germany Webpage
Click on the above link to visit the KPMG Germany webpage on the Mondaq website
For disclaimer and copyright see end of this article.

The 1996 Tax Act included provisions sharply restricting VAT refunds to entrepreneurs resident outside of the European Union. The German tax authorities have now issued a directive interpreting the new provisions (BMF-Schreiben vom 7.02.1996 - DB 1996, 404). We therefore take this opportunity to review the procedures for VAT refunds to non-residents in general before reporting on the details of the new directive.

1. VAT REFUND ENTITLEMENT

In all countries of the European Union, the VAT owed by an "entrepreneur" (a term of art essentially designating persons required to charge VAT with respect to goods and services they provide) is in principle arrived at by subtracting VAT charged to the entrepreneur from VAT charged by him. Furthermore, if VAT charged to an entrepreneur exceeds VAT charged by him, he is generally entitled to