refund of German VAT for Chinese companies

By Sven Rücker, ECOVIS Düsseldorf

Can Chinese companies apply for a refund of German VAT paid?

Doing business in Germany any acting company will sometimes be invoiced by a German service provider, such as lawyers, tax consultants. Usually the invoices will be exempt from German VAT. In special cases the service provider will be forced to charge VAT to the company from abroad, e.g. if his/her services are related to German real estate in the broadest sense. How to get this VAT refunded by the German tax authorities?

German VAT will be refunded to foreign enterprises if they received the respective services for the enterprise’s business purposes. Furthermore the resident country of the applying company has to be judged as ‘mutual’ to German legal situation. A list of countries is to be published at regular intervals, at last on Feb 22, 2013 (reference number IV D 3 – S 7359/07/10009). Taiwan is listed since July 1st, 2010. Unfortunately, the People’s Republic of China is not listed as ‘mutual’ yet, so a refund of German VAT is not possible.