Tax exemption for intra-community supplies – German Federal Ministry of Finance clarifies areas of doubt concerning the meaning of recapitulative statements (monthly EC sales list)

21. July 2022

Since 01 January 2020, it is required by law that intra-community supplies are only exempt from taxes if declared correctly and completely in the Recapitulative Statement (monthly EC sales list) by the providing business person.

The Federal Ministry of Finance issued strict administrative guidance on this matter which in part exceeded the law text significantly. According to the public notice of the Federal Ministry of Finance dated 20 May 2022, these regulations will be moderated and doubts be clarified. The changes are to be applied retrospectively on all supplies delivered after the 31/12/2019. 

  • So far, the VAT Application Decree [Umsatzsteueranwendungserlass - UStAE] stated that the prerequisites for tax exemption of intra-community supplies were not fulfilled if the “business person does not submit the recapitulative statement correctly, completely, or not in due time”. In strict interpretation, this could mean that a delivery not declared within due time in the recapitulative statement would be taxable, solely due to this failure to observe the applicable time limit – and that this failure may not be fixed. In the updated version, the Federal Ministry of Finance eliminated the requirement of submission in due time from the regulation. The Ministry states explicitly that the first-time submission of a recapitulative statement or its correction within the period of assessment has a retrospective effect.
  • Furthermore, Sec. 4 No. 1 letter b VAT Act [Umsatzsteuergesetz - UStG] includes a reference to Sec. 18 (10) VAT Act, according to which the business person is required to correct an incorrect or incomplete recapitulative statement within one month. According to the changed statement of the Federal Ministry of Finance, this regulation shall ensure only a proper performance of the intra-community control procedure and the fine proceeding, if any. Hence, an intra-community supply will not become taxable solely due to the fact that an incorrect recapitulative statement was not corrected within one month.  
  • Furthermore, the BMF emphasises that intra-community supplies are to be declared for the applicable reporting period even in case of a retrospective correction in the recapitulative statement. According to Sec. 18 (8) VAT Act, the applicable reporting period is the reporting period during which the invoice was issued, however, no later than the reporting period during which the month following the performance of the intra-community supply ends.
  • The principles presented are to be applied retrospectively on all intra-community supplies delivered after the 31 December 2019.

In its public notice dated 20 May 2022, the BMF therefore provides clarification for companies regarding that tax exemption of intra-community supplies may not be denied solely if recapulative statements were not submitted within due time. However, tax exemption of intra-community supplies is subject to high requirements concerning not only VAT reporting requirements as well as e.g. accounting and supporting documents. Please contact us if you need help here!

Author: Ira Rave

Author: Grant Thornton