Extensions of Deadlines for VAT Pre-Registrations
The deadline for submitting VAT can be a source of stress for companies, self-employed individuals, and freelancers who need to report their VAT either monthly or quarterly to the tax office and then again in the annual VAT return the following year. The tax office typically grants a deadline until May 31 of the following year for the VAT return and a ten-day window for VAT pre-registrations. This can be particularly burdensome for start-ups that have to submit monthly VAT pre-registrations. For instance, the January pre-registration is due by February 10.
To alleviate this pressure, a long-term extension can be requested, granting an additional month for submitting VAT pre-registrations. The January pre-registration would then be due by March 10.
Benefits of this Extension Include:
- An extended two-month payment period by the tax office
- An additional month to collect and submit receipts
- Avoidance of late fees due to the extended deadline for VAT pre-registrations
- Increased flexibility in cash flow planning, considering the VAT from two months prior
Additionally, entrepreneurs who submit monthly VAT pre-registrations must make a special advance payment. This payment is calculated as one-eleventh of the total VAT prepayments made in the previous year.
For example, an entrepreneur who paid €22,000 in VAT the previous year must make a special advance payment of €2,000. If the business was established only in the previous year and VAT was not paid for the entire year, the entrepreneur must annualize the amount paid and submit one-eleventh of that as a special advance payment. If the business was established in the current year, the entrepreneur must also pay one-eleventh of the expected advance payments for the current year as a special advance payment. This calculation must be submitted with the application for the extension and paid on time. This special advance payment serves as an advance and can be deducted in the VAT return for the last application period. It is important to note that this special advance payment must be recalculated, registered, and paid annually by February 10. Entrepreneurs who pay their VAT quarterly in advance are exempt from making this special advance payment.
Application Deadlines for Long-Term Extensions
It is possible to apply for a long-term extension at any time, not necessarily at the beginning of the year, but whenever the deadline for the VAT pre-registration for which it is first to apply is reached. For example, if an entrepreneur submits monthly VAT pre-registrations and wants to apply for a long-term extension by April 10, it would apply to the pre-registration for March. Those who submit VAT pre-registrations quarterly must apply for the long-term extension by April 10 if they want it to cover the pre-registration for the first quarter. They can also apply for a long-term extension for any other quarter of the year.
How We Can Help
Our law firm assists your company with its tax, accounting, and payroll obligations in Germany. Please contact us if we can be of assistance.
