As we anticipated in our previous post, many Spanish companies are forced to leave their borders to open new markets and not lose the pace of their competition. If necessary, the VAT recovery of international travel expenses becomes the most effective way to reduce the cost of this effort.
We will see in detail what is the tax and administrative regulations that apply and how and when it is possible to recover VAT from travel expenses in the country known as the ‘locomotive’ of the EU: Germany.
Once again, we have to distinguish between those companies that are settled with a permanent establishment in Germany and those companies that are based in Spain and their employees make trips to the country in question, since the way to proceed for the recovery of VAT in one and another case is completely different.
For companies that have a permanent establishment in Germany, the VAT applicable to travel expenses of their employees during the performance of their professional work in that country, must be recovered by presenting the VAT return of the entity to the tax agency of the aforementioned country, either within the preliminary German VAT returns, monthly or quarterly, or in the annual VAT return.
As is logical to think, the travel expenses must have been generated in relation to the activity of the company in question and within these include the most common, such as fuel costs, rent a vehicle, accommodation, meals, etc., as well as other expenses related to business matters.
It should be noted that if the expense is documented by a simplified invoice and the gross amount does not exceed 150 Euros, the document itself is considered valid for VAT recovery.
However, the supplier is always obliged to issue an invoice that complies with the required information requirements, as well as the rectification of an invoice already issued. The invoice may be issued in paper or electronic format provided that the authenticity of the origin of the invoice, the integrity of its contents and its legibility can be confirmed according to the German VAT Law.
For the issuance of an electronic invoice the recipient must have given his consent to the issuance of the invoice in that format. Electronic invoice means those that meet the requirements just described and that have been sent by email as PDF or text files, through an EDI procedure, by fax or fax server, as well as those sent by online file transfer .
On the other hand, when it comes to the international travel expenses accrued by the workers of a Spanish company whose employees move to Germany for work reasons, the deductible expenses must also, logically, be related exclusively to the business activity.
In this case, the procedure for recovering VAT from travel expenses differs considerably from that just described for the previous case. In the first place, companies must take advantage of the European VAT reimbursement scheme included in Directive 2008/09 / EC of the European Parliament and in order to apply this scheme, the company in question must meet the following requirements:
You can not have any fiscal obligation, nor be registered for tax purposes in Germany
You can not have a permanent residence or establishment in the country
Do not make supplies in Germany (subject to limited exclusions)
As in the other case, companies may deduct VAT from travel expenses during their stay in Germany. The most common travel expenses are accepted, such as those incurred for travel (plane, train, taxi, rental cars, etc.), fuel, hotels, meals, etc., but always fully justified within their professional activity .
The minimum amounts that can be claimed vary depending on the time period claimed. If the request refers to a period less than one calendar year, but not less than three months, the amount whose refund is requested can not be less than 400 Euros. On the other hand, if the application is made for a period of one calendar year or the remainder of the calendar year, that amount can not be less than 50 Euros.
VAT refund requests for travel expenses can be made by the company itself or a third party on their behalf, in which case you must present a power of attorney along with the application, through the Spanish tax agency. For VAT refund requests of electronic invoices the amount of the invoices (in general) must add at least 1,000 Euros of taxable base or 250 Euros in the case of invoices for fuel. This request will be sent through the Spanish tax authority, which will send it to the Federal Tax Agency of Germany (Bundeszentralamt für Steuern) for consideration.
At the time of submitting the application, all the documentation must be sent, including the annexes that may accompany the invoices. The German tax authorities normally accept VAT refund requests supported by electronic invoices, but only when the identity of the issuer can be unequivocally demonstrated and that the content of the invoice has not been altered from the origin. That is, the bases of certified electronic invoicing are applied.
Now that you know how and in what cases VAT can be recovered from travel expenses in Germany, use a specialist. 60dias has been recovering VAT from travel expenses since 2008 without altering the administrative processes of its clients, or interfering with the way its staff works.
Contact us and you will see how you can make your international trips even more profitable.
Images: courtesy of unsplash.com (LoboStudio Hamburg, Illia Cherednychenko)