Country-specific updates: Germany

New provision regarding the due date of import VAT / reduction of the taxable person’s liquidity burden

Section 21 (3a) of the German VAT Act, which has been introduced by the Second Corona Tax Aid Act, amends the due date for import VAT which might lead to a reduction of the taxable person’s liquidity burden.

Until the new provision entered into force the assessment and collection of import VAT have been carried out in and based on the import duty assessment. Import VAT had to be paid immediately and only in the case of an importation by a taxable person no later than the 10th day after import. In case the taxable person has been previously granted a deferment account, the import VAT was only due on the 16th day of the month following the month of import.

Further, the taxable person has only been able to claim the resulting import VAT as input VAT by filing VAT returns. This has led to situations in which the taxable person’s liquidity has been burdened for up to three months.

Under the new Section 21 (3a) of the German VAT Act import VAT needs to be paid only on the 26th day of the second month following the month of import. However, this applies only if overall a deferral of payment has been granted to the taxable person by the customs authorities pursuant to Article 110 (b) or (c) of the Union Customs Code.

Because of this new provision the import VAT is often only payable after the taxable person has received the import VAT as input VAT deduction. Consequently, the taxable person’s liquidity burden has been reduced or even eliminated. The new liquidity advantage is granted without interest and should be risk-free.

The current new provision is useful as it reduces or even eliminates the liquidity burden of the taxable person. However, it requires a deferment account which needs to be applied for. Businesses that do not yet have such deferment account yet should try to apply for one to optimize their liquidity.