Preliminary VAT return is a regular report to the tax office in which you set off the VAT collected in the reporting period (VAT on sales invoices) against the deductible input VAT (on purchase invoices). The difference results in the amount payable or an input VAT surplus; the preliminary VAT return thus serves for the ongoing payment or refund of VAT under the German VAT Act (UStG).
Who must submit a preliminary VAT return?
Under § 18 UStG the reporting period for advance returns depends on the VAT of the previous year. Typical breakdown:
- monthly, if last year’s VAT exceeded €7,500,
- quarterly, if last year’s VAT was between €1,000 and €7,500,
- annually, if last year’s VAT was at most €1,000.
For newly established businesses that have no prior-year values, the tax office sets the reporting period; the tax office often requires monthly filings at the start. The preliminary VAT return must be submitted electronically via ELSTER.
Contents and calculation
The preliminary VAT return contains the declaration of taxable sales, the VAT attributable to them and the deductible input VAT. Mathematically:
VAT payable = VAT (observe accrual/cash accounting) − deductible input VAT
Practical calculation examples
- Example 1 (VAT payable): In a month you issue sales invoices with €5,000 output VAT and may deduct €1,200 input VAT. VAT payable = €5,000 − €1,200 = €3,800 (payable).
- Example 2 (input VAT surplus): You have €2,000 output VAT and €3,000 input VAT. Result = −€1,000 → input VAT surplus, which is refunded or offset against future VAT payables.
It is important to distinguish between accrual and cash accounting: Under accrual taxation VAT arises when the supply is performed; under cash taxation VAT arises when the payment is received. The taxation method affects in which period transactions appear in the advance return.
Practical notes for bookkeeping
Deadlines and filing
The preliminary VAT return must generally be submitted and paid by the 10th calendar day of the following month (e.g. the return for March by 10 April). If you miss the deadline, you may face late-payment penalties and estimates by the tax office.
Permanent extension and prepayment
Entrepreneurs can apply to the tax office for a permanent extension of the deadline, which usually extends the filing date by one month. For monthly filers a special advance payment of 1/11 of the previous year’s VAT is required. Note that the special advance payment generally must be made by the time of the last regular advance return of the year.
Electronic submission and accounting software
Filing is done electronically via ELSTER. Most accounting programs (e.g. DATEV, Lexware or specialized cloud solutions) automatically generate the required figures and transmit them electronically. Ensure correct account labeling and attachment of supporting documents so input VAT is not overlooked.
Practical tips and error prevention
- Maintain monthly control lists: outstanding invoices, advance payments, intra‑community supplies (observe the reverse‑charge rules).
- Check the correct tax rates (7%, 19% or tax‑exempt) and document exceptions.
- Allocate incoming invoices promptly so input VAT claims are not lost.
- For cross‑border supplies and services observe the rules for intra‑community supplies/services and their classification in the advance return.
- Keep to deadlines or actively apply for the permanent extension to avoid liquidity bottlenecks.
A correctly prepared preliminary VAT return protects against subsequent assessments and penalties. If in doubt, e.g. with international sales or unusual transactions, consult your tax advisor or contact the tax office with specific questions.