Cologne Fiscal Court: Input VAT refunds are not permitted where a foreign trader carries out transactions with private individuals in Germany

For­eign com­pa­nies that sup­p­ly goods or ser­vices to pri­va­te indi­vi­du­als in Ger­ma­ny can­not recla­im the input VAT incur­red under the so-cal­led input VAT refund pro­ce­du­re. This was cla­ri­fied by the Colo­gne Finan­ce Court in its jud­ge­ment of 13 Novem­ber 2025 (Case No. 2 K 2009/24).

What was the starting point of the legal dispute?

In 2022, a Dutch entre­pre­neur sup­pli­ed, instal­led and com­mis­sio­ned a sec­tion­al door for a pri­va­te indi­vi­du­al in Ger­ma­ny. In doing so, he char­ged Ger­man VAT and remit­ted it to the tax office. He sub­se­quent­ly appli­ed for a refund of his input VAT for this peri­od via the spe­cial input VAT refund procedure.

This pro­ce­du­re is actual­ly a sim­pli­fied way for for­eign busi­nesses to cla­im a refund of input VAT wit­hout having to sub­mit a full VAT return in Ger­ma­ny. Howe­ver, the tax office rejec­ted the application.

Why did the application fail in court?

The Colo­gne Finan­ce Court upheld the rejec­tion on two grounds.

Wrong procedure selected

The spe­cial remu­ne­ra­ti­on pro­ce­du­re under Sec­tion 59(1) of the Value Added Tax Imple­men­ta­ti­on Ordi­nan­ce (UStDV) is available to for­eign busi­nesses only if they eit­her do not gene­ra­te any taxa­ble tur­no­ver in Ger­ma­ny at all, or gene­ra­te only such tur­no­ver whe­re the reci­pi­ent of the sup­p­ly is lia­ble for the tax. This is the case, for exam­p­le, with con­s­truc­tion ser­vices bet­ween busi­nesses under Sec­tion 13b of the Value Added Tax Act (UStG), known as the rever­se-char­ge procedure.

In this case, howe­ver, the tran­sac­tion invol­ved the sup­p­ly of goods to a pri­va­te indi­vi­du­al. Pri­va­te indi­vi­du­als can­not assu­me lia­bi­li­ty for the tax, so the trader had to pay the VAT hims­elf. Con­se­quent­ly, he was sub­ject to the stan­dard taxa­ti­on pro­ce­du­re and was not entit­led to the sim­pli­fied refund procedure.

Deadline missed

Fur­ther­mo­re, the claims had not been sub­mit­ted within the pre­scri­bed time limit. Under Sec­tion 61(2) of the VAT Imple­men­ta­ti­on Regu­la­ti­on (UStDV), claims for a refund must be sub­mit­ted no later than nine months after the end of the calen­dar year in which the entit­le­ment to an input tax refund aro­se. This dead­line is a so-cal­led pre­clu­si­ve dead­line, mea­ning that it can­not be exten­ded, nor can a fail­ure to meet it be reme­di­ed retrospectively.

What applies instead?

For­eign busi­nesses that car­ry out tran­sac­tions with pri­va­te indi­vi­du­als in Ger­ma­ny which are sub­ject to VAT must fol­low the stan­dard VAT pro­ce­du­re. This means that they must regis­ter for VAT with the rele­vant Ger­man tax office and sub­mit an annu­al VAT return. Only in this way can they cla­im back their input VAT for the calen­dar year in question.

It is important to note that it is not pos­si­ble to switch bet­ween the two sche­mes within a sin­gle year. Anyo­ne who has gene­ra­ted taxa­ble tur­no­ver in Ger­ma­ny at any point must account for all input VAT for that year using the stan­dard scheme.

What does that mean in practice?

For for­eign com­pa­nies that occa­sio­nal­ly car­ry out work in Ger­ma­ny – such as trade­speo­p­le or instal­la­ti­on firms from other EU count­ries – this ruling could have far-rea­ching con­se­quen­ces. Even a sin­gle ser­vice pro­vi­ded to a pri­va­te indi­vi­du­al could result in the sim­pli­fied VAT sche­me being ruled out for the enti­re year. Anyo­ne who is unsu­re about the VAT tre­at­ment of their ser­vices in Ger­ma­ny should seek tax advice in good time.