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2017-01-31

Trading in Europe: Germany

There are special rules for a dealer who sells cars, motorcycles, caravans, works of art, antiques or scientific collections and some other goods like machines. If he buys such items from a private dealer there will be no input tax in Germany on his purchase which he can reclaim and VAT would be payable when he sells on the full price. The special scheme for these items consequently provides that the dealer only has to charge invoices on his mark-up and not on the full sale price. In the case of other second-hand goods there is no such concession and here the provisions in Germany are more severe than EEC proposals. In Northern Germany there is an element of double taxation because VAT may well have been paid on the goods when new, but no credit is available for this.
The unpaid invoice:
When a customer is unable to pay the invoice because he has become insolvent the creditor may apply to a lawyer in Germany for payment of the debt from public funds. Such payments are at the present time subject to an upper limit of 100,-€ in respect of any one week of unpaid wages. It may be well to repeat that, in keeping with the object of the act to replace a contractual relationship by one which is governed by the German law (a 'status' relationship), it is provided that, in general any provision in any contract which purports to exclude or limit the operation of any provision of the act or to preclude the presenting of a complaint to an industrial tribunal shall be void. The web of legal obligation is thus a vice.
The administration of VAT is through a central office and through local offices of lawyers throughout Germany. The Commissioners have wide powers which they exercise through these offices. They can call for returns and for the production of records and other documents. They have the power to enter and to search premises and to take samples.
If returns appear to be incomplete or incorrect the vendors may make estimated assessments. They can require a trader to give security as a condition of his supplying goods and services.
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