The German Fiscal Court Cologne, which is competent for disputes arising from VAT refund procedures under the 8th Directive for EU-businesses (2008/9/EC) and 13th Directive for non-EU businesses (86/560/EEC) had to clarify the relationship between multiple VAT refund applications concerning the same refund period and VAT amount. In addition, the court had to deal with the conditions for the extension of objection periods. (decisions dated 3 August 2016).
A UK tax payer applied for German VAT refund for the 4th quarter 2011. The tax payer submitted an electronic VAT refund application acc. to the 8th Directive via the UK online portal. However, no original invoices have been uploaded in the portal. The German Federal Central Tax Office (BZSt) which is in charge do decide about VAT reclaims under the 8th and 13th Directive in Germany requested to send the missing invoices. Due to staff changes in the tax payer´s company (maternity leave) the request was ignored. Consequently, the BZSt rejected the application by e-mail. The tax payer´s staff mistakenly interpreted the rejection note as a positive decision. After expiration of the objection period the tax payer noticed the mistake and uploaded the missing invoices. The BZSt considered this as delayed objection and rejected the appeal.
Before 30th September the tax payer submitted once again a second VAT refund application for the 4th quarter 2011. This time the tax payer also uploaded the scanned invoices. However, the BZSt refused the VAT refund once more and argued that the case is already decided by the prior rejection note.
The UK tax payer appealed to the German fiscal court. The court fully agreed with the BZSt´s position and pointed out (shortened):
The tax payer missed the objection deadline. The German objection period is on month upon notification of the rejection notice. The BZSt sends the notices regularly by e-mail and it is assumed by law that the mail is received on third day after sending. However, there are exceptions in case of weekends, holidays and a delayed receipt e.g. server error. Upon expiration of the objection period the decision becomes final.
Note: Extension of the objection period
There is a chance to extend the objection period. This is the case, if the tax payer or his representative cannot be blamed for missing the deadline. However, the conditions are not easy to meet as the tax payer is also responsible for actions of their representatives (i.e. director, tax consultant, lawyer). If the tax payer´s staff missed the deadline the tax payer should prove that he proper instructed and supervised the responsible staff. The fact that the notice is written in German and leads to linguistic misunderstandings does not give rise to an extension. Misunderstandings could be easily avoided by proper translations. In light of these principles, the UK tax payer definitely missed the objection period.
Final decision blocks new applications for the same refund period and VAT amount
Further reason from the Court: The tax payer could not change the outcome by filing a new complete application. Once a VAT refund application has been rejected by the BZSt the tax payer can only change the outcome by filing an objection (unless it is subject to special correction rules). In case the tax payer does not file an objection and the rejection notice becomes final the tax payer cannot raise another application to recover VAT for the same refund period and VAT amount. In other words: the final decision blocks further applications for the same period and amount. This even applies if the time limit for filing the application is not already expired (8th Directive: 30 September of the following year; 13th Directive in many Member States 30 June of the following year) and if the new application contains former missing invoices.
VAT reclaims in Germany by following the 8th/13th Directive are very strict and formal. Although the basic VAT refund scheme is nearly harmonized under the 8th and 13th Directive among the Member states the objection procedure solely depends on national regulations. In order to avoid any unpleasant surprises it is strongly recommended to contact a German tax advisor based in the (other) Member State, because it’s often a substantial amount of VAT in question and many mistakes can be easily avoided by using specialized knowledge on VAT.