Besides the decree published by the German Ministry of Finance on 19 March 2020 that includes actions regarding the deferment of general tax liabilities and a suspension of enforcement of pending tax payments of tax payers directly affected by the Covid-19 crisis upon application until 31 December 2020, many Ministries of Finance of the individual states of Germany have introduced further actions to support affected tax payers. One common action taken by many states includes the refund of the special advance VAT payment made by tax payers earlier this year upon application (see, for example, announcements of the Ministry of Finance of the German States Baden-Württemberg, Bayern, Hessen, Mecklenburg-Vorpommern, Niedersachsen, Nordrhein-Westfalen, Saarland, Sachsen, Thüringen).
The special advance VAT payment has to be made by tax payers who make use of the permanent extension of the filing deadline for preliminary VAT returns. Under the permanent extension of the filing deadline, the deadline is postponed by one month to the tenth day of the second month following the period of assessment. When applying for such an extension, tax payers that file preliminary VAT returns on a monthly basis are generally required to make an advance payment of 1/11 of the annual VAT liability of the previous calendar year. Now, this advance payment has to be refunded by competent tax authorities of the concerned states upon tax payer’s application. The filing deadline, however, will remain the same (i.e. the second month following the period of assessment).
By this action, businesses are supported with an instant positive cash-flow while they can still make us of the permanent extension of the filing deadline and postpone the filing of preliminary VAT returns (and consequently the payment) by an additional month to save liquidity if a VAT payment position exists. Businesses that are in a VAT payment position and have not yet applied for a permanent extension of the filing deadline could try to file the respective application and ask to waive the required advance payment referring to the current situation to postpone the filing and consequent regular VAT payment by one month.
Source: Tim König, M.Sc., Steuerberater
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