Indirect taxes

“But all this is EU!” … is what we frequently hear from internationally successful companies – in full conviction that the legal frameworks must be identical in all EU member states.

However, many of these companies had to make the experience that, although the VAT Guideline sets the basic principle for the national VAT legislation in each of the EU member states, the individual countries are allowed to vary certain regulations. The financial consequences resulting from such a perception can considerably impair the business margin that a company expects to achieve.

“This has nothing to do with German VAT!” …

… is another frequent statement by companies with cross-border activities – and this assumption is in general correct. However, in the bustle of everyday business companies often miss to realize that they have foreign VAT obligations to fulfil. In most cases, penalties for the management and significant financial consequences will not be long in coming.

“We are selling to German companies – so German VAT applies!” …

…is still a widely spread opinion among companies doing business with a significant volume all over the world. However, this perception overlooks the possibility that invoices between German companies may have to include foreign VAT. The (then uncorrectly) invoiced German VAT becomes non-deductible input tax for the contractual partners in Germany. Penalties for the involved foreign companies and unpleasant discussions with the contractual partners, who are unable to claim VAT refund in Germany, are the consequence.

These three quotations from our advisory practice show clearly why – (ideally) before starting new business activities – it is so important to give attention to the VAT related consequences – not only regarding Europe but in particular also regarding third party countries.

With all this in mind, it becomes obvious that, while corporate tax rates are decreasing continuously, indirect taxes gain in importance getting also more and more in the focus of the tax authorities, not only in Germany but worldwide. In your daily business it is therefore essential for you as a company to know

  • whether to invoice VAT?
  • if yes, domestic or foreign VAT?
  • which tax rate applies?
  • whether any exemptions apply?
  • which VAT related obligations arise for your company and where?

To solve these and other VAT related issues you are looking for a competent advisor at your side who combines professional expertise with practical realization.

The Global Indirect Tax Group of Mazars comprises a worldwide network of experts advising companies in the area of Indirect Tax, i.e. VAT and Customs Duties, Foreign Trade Legislation and Excise Duties.

We are here to help: fast, competent and practice-oriented. Due to our presence in almost all European countries and worldwide in all major global economic centres, we will solve your VAT problems and help you in meeting your VAT obligations – no matter where.

A selection of Mazars’ new service offering in Germany includes the following:

  • Indirect Tax planning in various industries
  • VAT reviews and due diligences
  • Cross-border Indirect Tax planning and reorganizations
  • Supply Chain / Business Model Optimization (BMO)
  • Indirect Tax advice in connection with IT-set up
  • Review, optimization and implementation of Indirect Tax structures
  • World-wide tax-optimized managing processes (TMC)
  • Risk management concepts for companies
  • Site selection advice
  • Training sessions for staff in Germany and abroad
  • Assistance in respect to VAT / Tax audits

Do you have questions or need further information?

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Factsheets

VAT

The VAT system in use remains of great importance to companies in Germany, as well as on a European level. Falling income tax rates and significant tax deficits are prompting financial authorities to focus ever more closely on VAT. The increasing attention that the financial authorities are paying to VAT issues is associated with the growth of highly efficient digital data analysis during external audits. However, Group-internal arrangements are also becoming the subject of critical questions.

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