Advance returns and annual reconciliation
Registered businesses generally report VAT during the year and reconcile it in an annual return. The filing frequency is assigned under the applicable rules and can change.
The return compares output VAT on sales with deductible input VAT on business purchases. The difference is paid or refunded.
A workable monthly process
Close the bookkeeping early, reconcile bank movements and check invoices before submitting. International services, imports and EU supplies need separate attention.
- Separate gross receipts from VAT collected.
- Check supplier invoices for mandatory details.
- Reconcile sales to issued invoice numbers.
- Review EU transactions and reverse charge.
Filing is not payment
Submitting a return does not move money automatically unless a valid direct-debit mandate is in place. Monitor both the submission confirmation and the bank payment.
Frequently asked
Do all businesses file monthly VAT returns?
No. Filing frequency depends on the business and its VAT position.
Can I deduct VAT from every business purchase?
Only where the input-tax conditions are met and the purchase serves taxable business activity.
What if a VAT return is wrong?
Correct it promptly. Waiting for an audit usually makes a manageable error more expensive.
This guide is general information on German tax law, not advice on your individual case. Rules and figures change with each tax year.