The Recovering of the sales VAT-tax deposit for exported cars

A not insignificant proportion of German used cars are bought up by foreign commercial car dealers and then exported abroad.

In terms of sales tax, these are sales tax-free export deliveries or intra-Community deliveries if the delivery is made to other EU countries. The German seller therefore does not need to charge the obligatory 19% sales tax on his invoice.

Extensive proof requirements led to the withholding of deposits

However, due to the increased obligation to provide evidence to the tax office within the last years, that the vehicle actually went abroad (documentation proof), many sellers started charging the sales tax and withhold it as an deposit and initially reporting it to the tax office.

Retroactive classification as a taxable supply

The reason is that the tax office was very happy not to recognize the export in the case of tax audit or an VAT special audit, despite (almost) having provided proof of the export. The result is then the retrospective classification as a taxable supply that did not meet the requirements for tax-free export/intra-community supply according to § 6 or § 6a VAt law code. Since the foreign buyer could no longer be reached in case of doubt, the seller was left with the 19% sales tax alone.

In order to prevent this, the sellers have started to withhold the sales tax of 19% as an deposit. The deposit was only paid out after the relevant export documents had been submitted. However, there is often ignorance on the part of the seller about the exact content of the documentary evidence to be provided.

Unfortunately, it often happens that the seller does not refund the deposit despite the proof of export being provided. This can be due to fear of the above mentioned consequences  by the tax office or it can be the result of fraudulent intentions. In both cases, therefore, legal action is required.

Knowledge of the obligation to provide evidence is essential

The special features of such cases lie in the knowledge of which documents must be provided to provide proof of export. The requirements are regulated in § 8ff UStDV. However, the devil is in the details and essentially depends on whether it is a matter of transport, dispatch or a so-called pick-up case for VAT purposes. Our law firm has repeatedly successfully conducted processes to recover the VAT deposit and would be happy to advise you on how to proceed in such cases.