Advance VAT return in Germany: How it works

What exactly is an advance VAT return?

The advance VAT return 💬Umsatzsteuervoranmeldung, or UStVA for short is a statement businesses prepare for the tax office. It contains the value-added tax paid and collected in a specific period, specifically the input tax 💬Vorsteuer paid to suppliers and VAT paid by customers. The difference between the two amounts is the VAT payable.

The VAT payable can be positive or negative. If it’s positive, the total VAT received is greater than the total input tax paid. If the payment amount is negative, the tax office refunds the difference.

What is the purpose of the advance VAT return?

VAT is an essential source of revenue for the government. The payments throughout the year distribute the revenues. The state also protects itself against payment defaults in this way, for example, if a company files for insolvency before the end of the year.

The small instalments can serve businesses well. This avoids being hit with a large tax bill at the end of the year. Another benefit is that businesses receive input tax refunds sooner rather than later.

Who has to submit an advance VAT return?

In Germany, most businesses are subject to VAT from the first day of their activity. This applies to all paid supplies and services under §1 (1) UStG. In practice, this includes:

• Corporations (e.g., GmbH, UG)
• Partnerships (e.g., GbR)
• Sole proprietorships
• Most liberal professionals—with a few exceptions, such as certain medical professions

If your business is VAT-liable, you must charge VAT on your invoices and regularly file an advance VAT return with the tax office. Only a small number of professions and activities are exempt from VAT obligations.

Who is exempt from advance VAT return?

You do not have to file an advance VAT return if your VAT liability in the previous year was below €1,000. In this case, the tax office usually only requires an annual VAT return.

Some liberal professionals are fully exempt from VAT and therefore from submitting advance VAT returns. This includes many health-related professions such as doctors, dentists, physiotherapists and alternative practitioners.

In addition, small businesses who opted for use of the small business regulation are exempt from charging VAT and therefore do not file advance VAT returns either. If a small business leaves out VAT on its invoices, it needs to add a legal note explaining the reason.

Deadlines for submitting advance VAT returns

The statement must be submitted to the relevant tax office by the 10th of the month following the pre-registration period at the latest (§ 18 UStG). Suppose the 10th of the following month falls on a weekend or public holiday. In that case, the advance return can be submitted on the next working day.

Whether your company must be submit monthly or quarterly advance return depends on the tax liability for the previous calendar year.

Quarterly advance VAT return

Suppose the tax liability in the previous calendar year is more than €1,000 but less than €7,500. In that case, it is possible to submit the advance return on a quarterly or quarterly basis (for example, the returns for May, June and July could be submitted on 10 August).

Monthly advance VAT return

If the tax liability in the previous calendar year was higher than €7,500, a monthly advance VAT return must be submitted.

Annual VAT return

Every company must submit an annual VAT return at the end of the calendar year. This yearly return contains the total amounts of VAT received and input tax paid in the accounting year. It must also be submitted in the event of an exemption from the advance return. If applicable, this is a 0-declaration.

Submission to the tax office

The advance VAT return must be submitted electronically via ELSTER, the official federal tax platform. Submission in paper form is only possible in cases of hardship and upon request.

To use ELSTER you need the so-called ELSTER certificate, a type of electronic signature. This is required so the tax office can clearly assign the advance return to the tax debtor.

To obtain it, you must first register with ELSTER, confirm your email address and enter a code you receive by post. The certificate is then stored in a password-protected file on your computer.

You will need the following data for the first electronic advance VAT return with ELSTER:

• Tax number
• Address of the competent tax office
• Company address
• Registration period
• Input tax and VAT amounts

Submitting the VAT return using accounting software with its own ELSTER interface is usually more convenient.

Permanent extension

Anyone who can’t submit the advance VAT return by the 10th of the following month can apply for a permanent extension 💬Dauerfristverlängerung. Suppose someone was liable for VAT in the previous year and submitted a monthly advance return. In that case, the permanent extension must be applied by 10 February at the latest.

If the advance return was submitted quarterly, the application must be submitted by 10 April at the latest. If the permanent extension is approved, the advance VAT return can still be submitted on time one month later.

📌 If the tax office doesn’t revoke the permanent extension, the authorisation remains valid for subsequent years without having to re-apply for it.

In addition, a special advance payment 💬Sondervorauszahlung must be made to the tax office by 10 February. The payment is 1/11 of the VAT payable for the previous year. If an advance return is submitted quarterly, a so-called 0 report must be submitted to the tax office instead of the special advance payment.

Missed deadlines and penalties

If the advance return is submitted late or not submitted at all, a late payment surcharge of up to 10% of the payment amount, up to a maximum of €25,000, is to be expected. If the payment amount is not transferred to the tax office on time, the tax office can charge 1% of the payment amount for each month that has elapsed before the late payment is received.