Input tax: Applications for tax refunds are still possible until September 30th.

Businesses can deduct foreign VAT as input tax under certain conditions. If they have worked in the EU, they must submit their tax refund application by September 30th.

Businesses that conduct business in other EU countries regularly pay VAT there, for example on business trips or trade fair appearances. Entrepreneurs who are entitled to deduct input tax in Germany can reclaim these input tax amounts through a special refund procedure. Ecovis tax advisor Madlen Pampel from Halle (Saale) explains how this works.

"The crucial factors are the deadline of September 30th and a precise application to the Federal Central Tax Office. Many businesses are giving away money because they shy away from the digital process or miss important deadlines," says tax advisor Madlen Pampel.

VAT refund procedure 

The refund procedure is aimed at businesses headquartered in Germany that do not generate taxable sales in the respective refund country and are not tax residents there. "Those who already maintain a permanent establishment in the respective country are not permitted to use the simplified refund procedure," the expert explained. A classic example of this is construction companies with a foreign permanent establishment. They must claim their input tax via the regular VAT returns of the respective country.

What is the procedure?

German businesses submit their applications via the portal of the Federal Central Tax Office (BZSt) . The BZSt reviews the information and forwards the form to the destination country. For certain amounts – generally €1.000 or more, and €250 or more for fuel receipts – electronic copies of the original receipts are also required.

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Furthermore, an application is possible starting from a minimum reimbursement amount of 50 euros. Each country applies its own rules: While Austria, for example, does not allow input tax deduction for car fuel, other EU member states have restrictions on hotel or restaurant bills. "Businesses must therefore check in advance exactly which items the respective country recognizes," says Pampel.

An application after the deadline is no longer possible.

Companies must submit their tax refund applications for all invoices from 2025 by September 30, 2026. "Anyone who misses this deadline will irrevocably lose their entitlement," explains Pampel.

In addition to submitting the return on time, a preliminary economic assessment is also worthwhile. For example, someone who refuels on the German side of the border before a business trip to Austria can take advantage of the straightforward domestic input tax deduction via their own VAT return and avoid the foreign refund procedure.

Which foreign input taxes are not deductible

However, businesses cannot claim back all input tax . Different rules apply depending on the country. Some countries, for example, have restrictions on hotel, entertainment, fuel, and toll costs , or on passenger transport costs such as taxis, buses, and trains.

"Austria, for example, only allows the reimbursement of input tax on gasoline costs in special cases. Reimbursement is not granted for regular passenger cars, but it is permitted for light commercial vehicles. In contrast, input tax on hotel costs is fully deductible in Austria," reports the tax expert.

Collect all supporting documents and submit the application.

First, you have to gather all the receipts and submit the application. "In some cases, however, it's best to avoid purchases with foreign VAT altogether. Especially when it comes to fuel for a car, it can be worthwhile for German business owners to fill up in Germany," says Pampel. This is because claiming input tax credits in Germany is significantly easier.

Abroad, this benefit is sometimes not granted at all or only above certain amounts. " Often the VAT refund process is complex and there are even restrictions," says Pampel. "So you should definitely consider whether the price advantage abroad is worthwhile or whether it is overshadowed by the bureaucracy and restrictions and therefore uninteresting."

Source: Ecovis

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