The tax number is mandatory on all outgoing invoices. The recipient of an invoice cannot deduct input tax without the tax number of the supplier on the invoice. Of course this only applies to companies with input tax authorization. Without a VAT ID number (Value Added Tax Identification Number) a company cannot identify itself as an entrepreneur in business with other entrepreneurs within the European Union. After the foundation of a company, it should therefore be fiscally registered without delay. Errors and missing documents or information in the application documents can waste precious time and/or entail higher administrative burden and higher costs. We will help you tackle this process efficiently and in time. We can also clarify the questions of the tax authorities.
The responsible tax authorities can thus issue a tax number without any delays after having checked the submitted documents and after the entry in the commercial register is done. A VAT ID number will be issued automatically upon request and without further checks after the tax number is issued. The VAT ID is indispensable for business transactions within the EU. More information can be found on our Youtube video “How to start a business in Germany in 10 steps“.
Which minimum documents must be submitted?
- 9-page questionnaire of the tax authority
- Copy of the Articles of Association
- Copy of an excerpt from the commercial register
- Opening balance-sheet
- Copy of the ID of the Managing Director (s)
- Proof of payment of the nominal share capital onto a bank account of the organization
- Personal Information on the shareholders
- Possibly further documents like e.g. profit and loss transfer agreement
You have received a tax number and have hired staff. What’s next?
By the time an employment commences, the entrepreneur has to register as an employer with the employment agency and get a company number. Subsequently, registration with the Statutory Accident Insurance is required. Furthermore, the employer must register the employees with their responsible health care carrier. In certain industries like construction, the employee registration needs to be done before the employees may even start working. Click here to learn more about our services for payroll accounting.
As soon as a company has received a tax number, it is obliged by law to submit monthly advance VAT returns online to the tax authorities until the 10th of the following month. An extension of the deadline by one month to submit advance VAT returns and make the respective payments is possible. To get the extension an application must be filed and a security deposit paid. In case the extension is granted, advance VAT returns may be filed until the 10th of the month after the next one. Benefitax will be happy to take over the application and the determination of the amount to be paid.
The entrepreneur can choose to a certain extent when the business commences for tax purposes. The earliest possible time for that is the day the articles of association are notarized. The latest possible time is the actual start of the business operations. If the business operations, however, start only after the entry in the commercial register, the tax authorities will request the company to apply for fiscal registration.
In order to submit advance VAT returns, all supporting documents and bank transactions must have been recorded in the bookkeeping beforehand. We do that for you. Learn more about Financial Accounting.
We recommend getting an expert opinion on VAT prepared by us before invoicing customers from foreign countries. Our expert opinion will make it for the person responsible to issue invoices to understand the invoice requirements. Thus, your company doesn’t run into trouble with the customer or the tax authorities. It is very embarrassing and expensive to correct errors later on if at all it is possible to do so.
If there are significant business relations of the parent company or co-subsidiaries in foreign countries, the business relations should comply with transfer price provisions. If you fail to comply with these rules, the tax authorities can estimate the profits of the German subsidiary and severe penalties can be imposed. Click here to get more information on transfer pricing documentation. We would be glad to advise you.
The Tax Authorities normally require further documents/information on foreign shareholders
- Employment contract of the managing director
- Office rental agreement for the company’s premises. Alternative: Premises in company’s own property.
- Proof that the paid nominal share capital is still available to the managing director(s)
- Name of a representative for the organization who is available in Germany
The tax authorities may carry out surprise visits to the German head office of the organization and according to our experience, this is not just pure theory. The visit is to check whether a newly set up business actually exists and that it is not just a letter box! Furthermore, the tax authorities might want to see the official letterhead of the company and also some marketing documents. This also helps to prove whether the company is actually operational and does not exist only on paper.
The tax number is issued only when all required information and documents have been submitted. We have a lot of experience in fiscal registrations and can often reduce the time until a tax number is granted.