As a self-employed person, you may make purchases outside of Germany but within the EU. In such cases, VAT can be handled in different ways. This article explains how it works and how you can claim back the VAT you've paid.
Please note that this article provides general guidance only. Tax rules may vary depending on your individual situation. When in doubt, ask your Tax Coach.
This article also covers how the reverse charge mechanism works, what rules apply to small business owners (Kleinunternehmer), how to handle invoices with foreign VAT, and how to reclaim VAT paid abroad.
In intra-community transactions within the EU, such as when a German business purchases goods or services from a company based in another EU country, the so-called reverse charge mechanism is often applied. In this case, the VAT liability is reversed: the seller does not charge VAT. Instead, the buyer must calculate the VAT applicable in their own country and declare it in their VAT return.
What this means for you: If you purchase goods or services from a company in another EU member state and provide your VAT identification number (VAT ID), you will generally receive an invoice without VAT, i.e. with a VAT rate of 0%. You are then required to calculate the applicable German VAT on the amount and report it in your VAT return.
The good news: If you are entitled to deduct input VAT, you can claim the calculated VAT as input tax at the same time. As a result, there is no actual payment obligation. Although the process may sound a bit complicated at first, it is usually a bookkeeping zero-sum transaction. The goal is to ensure that VAT is paid in the country where the consumption takes place, your country, while also simplifying trade within the EU.
If you are subject to the regular VAT scheme (meaning you charge VAT on your invoices), you should always provide your own VAT ID when making business purchases within the EU. The foreign supplier will then issue the invoice without charging VAT, and will include a note indicating that the reverse charge applies (e.g. "VAT liability of the recipient").
Tip:
Always include your VAT ID when ordering goods or services from other EU countries. That way, you avoid being charged foreign VAT, which cannot be reclaimed through your German VAT return.
The Kleinunternehmerregelung generally exempts the sales you make as a small business owner from German VAT, provided you meet the applicable requirements. However, this does not mean that you are exempt from all VAT obligations.
One important exception is the reverse charge mechanism. If you purchase certain business services from a supplier abroad, the responsibility for declaring and paying German VAT can shift from the supplier to you as the customer. This also applies if you are a Kleinunternehmer.
For services from a company established in another EU country, reverse charge can apply even if you did not provide your VAT ID. What matters is that you receive the service as a business and that the transaction falls under the reverse charge rules, not simply whether a VAT ID appears on the invoice.
As a Kleinunternehmer, this has an important consequence: you must declare and pay the German VAT due under the reverse charge mechanism, but you cannot deduct this amount as input VAT. The VAT therefore becomes an actual cost for your business.
If your supplier is based in another EU country, enter the expense with 0% VAT and select "Intra-EU Reverse Charge". You can usually identify an EU supplier by the EU VAT ID shown on the invoice.
If your supplier is based outside the EU, enter the expense with 0% VAT and select "Purchase from outside the EU".
💡Important for Kleinunternehmer:
If you need to submit a VAT pre-submission (Umsatzsteuer-Voranmeldung) due to reverse charge, please note that Kleinunternehmer currently cannot submit VAT pre-submissions through Accountable. You will therefore need to submit it separately via ELSTER.
For step-by-step instructions, see our guide: Filing a VAT pre-submission on ELSTER as a Kleinunternehmer, transactions under § 13b UStG
In practice, it's common for self-employed professionals to receive invoices that include foreign VAT, especially for travel expenses like hotel bills, restaurant receipts, rental cars, or trade show tickets in other EU countries. It can also happen if you forget to provide your VAT ID during the booking or order process.
Important to know:
You cannot deduct foreign VAT through your German VAT return.
For your bookkeeping: Record such expenses at the gross amount. The full invoice total, including foreign VAT, counts as a business expense, but you won't get an input VAT refund. So as a VAT-registered business, you lose money when you pay foreign VAT, since it cannot be refunded via the German tax system. As a small business owner, you're used to this anyway, as you book all your expenses as gross amounts.
Thankfully, if you're VAT-registered, you don't necessarily have to write off foreign VAT as a cost. You can apply for a VAT refund using the VAT refund procedure (Vorsteuervergütungsverfahren).
For EU countries, this process is relatively simple and handled via an online application at the German Federal Central Tax Office (BZSt). You upload your foreign invoices and submit a refund request.
Important conditions:
You must be entitled to input VAT deduction in Germany (i.e. not a small business owner),
And you must not have been VAT-registered in the other EU country during the refund period.
The deadline is typically September 30 of the following year.
This process is worthwhile if you've accumulated larger amounts of foreign VAT, e.g. from high trade fair fees or frequent hotel stays abroad. For smaller amounts, the administrative effort may not be worth it.
For VAT paid outside the EU (e.g. on business trips to non-EU countries), refunds may also be possible, but the rules vary by country and often require applications to be submitted directly to the foreign tax authority.
Important: Small business owners cannot participate in the VAT refund procedure, as they are not entitled to input VAT deduction. This means foreign VAT is always part of your business expenses and cannot be refunded.
The reverse charge mechanism shifts the VAT obligation to you as the buyer: you receive an invoice at 0% VAT and report the German VAT yourself.
If you are entitled to input VAT deduction, reverse charge is usually a bookkeeping zero-sum transaction.
As a Kleinunternehmer, reverse charge still applies, but you cannot deduct the VAT as input tax, making it a real business cost.
Foreign VAT on invoices (e.g. hotel costs in other EU countries) is recorded as a gross business expense with no input VAT deduction available.
VAT-registered businesses can reclaim EU VAT via the VAT refund procedure (Vorsteuervergütungsverfahren) at the BZSt; small business owners cannot.
Need help? Chat with us or email [email protected], we're happy to help.
Der komplette Leitfaden für die ersten 12 Monate - von Steuerberatern geprüft
Kostenlos herunterladen
Thank you for your feedback!
Useful
How much income tax is deducted from your income is largely determined by your tax class. There are ...
Read moreWorking as a self-employed professional has many advantages: You are your own boss and you can choos...
Read moreWorking with international clients can be tricky, depending on where exactly they’re located, whet...
Read moreThey always answer right away to any question I have, they provide clear answers, and they are very patient even when I struggle to understand. They try to explain in different ways. They are very helpful, responsive and friendly.
Chiara Marradi
10/05/2026
This is an amazing application with great support on issues. In short as in day I am addicted to it (in a positive way). I myself is from IT project management and the way they have captured the user requirement, it’s phenomenal.
Sumit Tewary
01/12/2024
UI is great. Feature packed and very easy to use. The team at Accountable were VERY quick to respond and their team of technicians soon had a fix in place. Very happy with the level of service so far. Thumbs up from me!
Dean Osborne
05/06/2023
Everything was great! All my questions were answered quickly and in a friendly manner.
Wenzeslawa Wegener
11/05/2026
This program is a lifesaver, and it is always improving. Plus, it has an AI chat feature that is actually useful.
Jeffrey Humble
12/01/2026
The coaching session on tax management was excellent, good material, excellent explanations and very insightful. Combined with the AI I never feel alone with Accountable.
Sergio Barbarino
13/04/2026
The availability of your team to help and guide people to understand their finances better is what really makes Accountable valuable. While the AI is able to give answers to most basic questions, specific scenarios need counsel from a human which your team performs beautifully.
Norma
06/04/2026
Fast and careful answers from Alina. Top service. Thank you.
Anonymous
06/04/2026
In the world where everyone seems to be out to get small entrepreneurs and overwhelm them with new rules, more taxes and reporting obligations, Accountable often feels like the one steady partner that actually wants you to succeed, providing quick, clear and personalised support. Thank you!
Janina Arsenjeva
10/04/2026
They always answer for questions wherever is via direct e-mail or through app. If they can’t answer fully they will forward you to the right place. Documents were always prepared well and ready to send further to government. Everything is intuitive in the app and easy to sort out even for someone completely green in this field.
Anonymous
12/03/2026
