Germany: New certificate of VAT taxable status

On November 18, 2022, Germany's Federal Ministry of Finance released a new certificate of VAT taxable status for entrepreneurs based in Germany. We dive into the importance of this new certificate and how it influences local and international business and VAT operations. 

Key takeaways: 

• Germany issued a re-announcement of the uniform federal certificate for entrepreneurs.  
• This sample form will provide proof of registration as a taxpayer (entrepreneur). 
• This certificate is for entrepreneurs who require confirmation of their VAT taxable status to claim input VAT in another country. This certificate also stands as proof of VAT registration in Germany to ease VAT registration abroad. 
• The relevant VAT Authority will issue this certificate upon request. 
• German-based companies will also be required to obtain the certificate, and any foreign entrepreneur with established branches or controlled companies based in Germany. 
• VAT 1 TN Proof of registration as a taxpayer (entrepreneur) replaces the form sample USt 1 TN.

What is the importance of the tax certificate in Germany?

The latest certificate, VAT 1 TN Proof, applies to entrepreneurs based in Germany that would like to claim input from a third country. In 2019 entrepreneurs were required to issue a Bundesministerium für Finanzen (BMF) letter. A BMF letter is issued by the Federal Ministry of Finance and is a decree of agreement between federal states. In 2022, entrepreneurs were required to issue a USt 1 TN form. 

However, recent amendments had to be made to ensure minimal objection in the foreign registration and claim process. The changes in the certificate include the following: 

Proof of registration as a taxpayer (entrepreneur)

The changes consider the inclusion of the date of the entrepreneur's VAT registration. Some third countries require this date to be able to check whether the VAT registration was given during the refund period. The other changes are editorial or typographical.

In the event of submitting the new certificate for claiming VAT in a third country, the certificate will only be valid if it's issued by entrepreneurs who are eligible to deduct input tax. If the entrepreneur only carries out tax-exempt sales that exclude the input tax deduction, the certificate will not be valid to issue (§ 19 paragraph 1 or § 24 paragraph 1 UStG). 

If entrepreneurs are required to provide proof of registration by foreign authorities, the German tax authorities have no objections to confirming the registration as an entrepreneur as long as the content of the forms corresponds to the regulatory content of the model form USt 1 TN.

Need help with your German VAT compliance?

Staying up to date with the latest legislation and VAT treatment can be tricky - unless you have experts in your corner. Find the right solution for your business to successfully register and claim VAT in Germany.