These are the basics:
Enterprises with legal seat in a foreign country (EU territory or non-EU member state) are entitled to VAT recovery through a VAT refund claim.
There are two conditions that have to be met to finish the VAT refund procedure in Germany successfully:
- The supply of goods or services must be taxable from a VAT law perspective in Germany.
Example: A German lawyer charges German VAT to a company outside Germany for his services.
The service is not taxable in Germany (outside the scope of German VAT).
As a consequence the German VAT can not be recovered through a VAT refund claim from the German Federal Tax Office!
- The company has received an original invoice from the supplier which fulfills the invoicing requirements of the respective country (i.e. according to § 14 Sect. 4 of the German VAT Law).
The legal basis for the refund of prepaid European VAT is results from the 8th Directive (79/1072/EWG) for companies based in Europe and the 13th Directive as of November 17, 1986 (86/560/EWG) for companies outside the EU territory. In Germany, these Directives have been implemented in § 18 section 9 of the German VAT Code (UStG) and in §§ 59 to 62 of the German VAT Implementation Regulation (UStDV).