Germany introduces long-awaited import VAT deferment

The deferment is goods news for importers, which were previously required to pay VAT within ten days from import.

The new scheme has a considerable cash flow advantage. Import VAT can now be deferred to the 26th of the second month following the import. In many instances, the importer will at that point already have received their VAT back through a deduction. 

The deferment scheme has been introduced in the Second Corona Tax Aid Act, designed to provide businesses with relief in a post-Covid world. However, the scheme offers long term benefits for companies importing to Germany.

Plan now to benefit later

A deferment account is required to take advantage of the deferment scheme, which needs to be established through the relevant German tax office. 

Any company planning to import goods to Germany should establish their deferment account now to enjoy the potential liquidity advantage going forward. 

In order to plan effectively, it is advisable to get full clarity on all administrative requirements needed to enjoy the deferment, as well as deferment account limits. 

Avoid import VAT leakage

At the best of times, import VAT can be overlooked (especially when invoices are managed outside of the scope of the finance department) leading to lost opportunities to claim back the VAT. 

The potential cash flow relief offered by the new German deferment scheme is a salient reminder that shipping invoices need to be scrupulously accounted for to maximise opportunities to claim VAT rebates.

VAT IT offers an integrated solution to ensure that import VAT is optimised at every stage. Get in touch to find out how to optimise cash flow and eliminate import VAT leakage. 

However, concern about the liquidity effects of importing into Germany is a long-standing issue. 

The amendment should not be seen merely as a source of immediate relief, but an opportunity for importers to optimise their cash flow on an ongoing basis.

To take advantage of the amendment - and enjoy considerable liquidity relief - any business that imports into Germany should apply for a deferment account from German tax authorities as soon as possible.  

Vat Global’s expert team is on hand to help you understand the intricacies of local tax office requirements. 

If you would like to set up a German VAT deferment account, get in touch with Vat Global to ensure you have everything you need to  gain immediate tax relief and optimise your cash flow in the future.