Germany VAT highlights in 2021

January 26, 2021

Back to 19% and 7% as from January 1, 2021

From January 1, 2021, the VAT rates of 19% and 7% will be applied to all supplies as there will no longer be a low-tax phase. The 7% rate applies to the collection of restaurant and catering services (excluding beverages) from January 1, 2021, to June 30, 2021.

Brexit – Expiry of the transitional period on December 31, 2020

Even though UK left the EU on January 31, 2021, the EU regulations were still applied until the end of the transitional period, December 31, 2020. The new agreement, made on December 24, 2020, does not affect the Withdrawal Agreement. However, from January 1, 2021, supplies and goods with Great Britain and Northern Ireland are subject to the VAT provisions applicable to a third country territory. Supplies and goods with Northern Ireland will continue to be subject to the rules for intra-Community trade.

MOSS transforms into OSS as from July 12021From July 1, 2021, The Mini-One-Stop-Shop procedure (“MOSS”) will be replaced by the One-Stop-Shop (“OSS”). This means that all electronically supplied services, supplies of telecommunication services and radio and television services as well as intra-Community distance sales and importations of goods with a value of EUR 150 or less can be reported via OSS for the entire EU.

Distance sales as from July 1, 2021

From July 1, 2021, the new EU minimum threshold will be applied uniformly to all supplies of goods to the EU Member States, and it will not be limited to collections to a specific Member State. Meanwhile, for distance sales from third countries, the VAT exemption for low-value goods up to 22 Eur will be abolished. Following sec. 5 para. 1 no. 7 of the German VAT Act, importing goods with a material value of EUR 150 or less will be VAT exempt but only when the output supply is reported in OSS.

No official has written confirmation of foreign VAT IDs by the Federal Tax Office as of January 1, 2021

From January 1, 2021, The Federal Central Tax Office will no longer provide official written confirmations of foreign VAT IDs. However, it is still possible to query foreign VAT IDs on their official website.

The submission deadline for annual VAT returns 2019 is extended from February 28, 2021, to August 31, 2021.

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