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Tax
05. Oct 2026
Julian Frische

Foreign input VAT as a source of liquidity - Changes in the VAT refund procedure

Whether it be a trade fair visit in Italy, project business in Austria or a customer event in France, many companies pay VAT abroad without making full use of the existing refund possibilities. A recent circular from the Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) set out a simplified input VAT refund procedure on the basis of enhanced digitalisation.

Fundamental principles of the input VAT refund procedure

The input VAT refund procedure allows companies that operate internationally to be reimbursed for VAT paid abroad without being registered for VAT in the respective country. Typical cases are travel and accommodation expenditures, trade fair expenses, hospitality costs or other business expenses on which foreign VAT is payable. Depending on the amount of these expenses, this may give rise to substantial refunds. At the same time, the procedure is subject to formal requirements as well as time limits so that careful preparation still remains essential.

Digitalisation of the procedure and simplifications regarding the provision of evidence

In the BMF circular of 2.6.2026, the fiscal administration revised the passages relating to the input VAT refund procedure in the ordinance on the application of VAT (Umsatzsteueranwednungserlass, UStAE). Changes have been made, in particular, to refund applications from businesses that are not based in the European Union.

The focus here (for all businesses) is notably the enhanced digitalisation of the refund procedure as well as the simplifications regarding the provision of evidence. In future, invoices and supporting documents should generally be uploaded electronically via the online portal of the Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt). For supporting documents with a total amount of up to €250, the obligation to provide proof will in fact normally not apply, although the BZSt may request the submission of the original supporting documents.

Please note

The changes therefore primarily concern the further digitalisation and simplification of the procedure. Of particular practical relevance is the fact that the collecting and transmitting of supporting documents, which has hitherto frequently been time consuming, is becoming increasingly standardised and digitalised. This will admittedly simplify the application procedure, but at the same time increase the requirements for a flawless internal organisation of the chain of supporting documents. By contrast, little has changed in terms of the basic requirements for the input VAT refund procedure.

Organisational adjustments in the processing of invoices

For applications for input VAT refunds to succeed it is essential for the internal organisation to be appropriately structured. Foreign invoices must be fully recorded, accurately assigned and checked as to their eligibility for an input VAT refund. A particularly crucial factor is the formal quality of the supporting documents, for example, with respect to the mandatory invoice information.

To avoid unused refunds or late claims as well as unnecessary delays in the refund procedure, it would therefore be advisable to establish clear processes for:

  • the systematic and digital recording of foreign supporting documents,
  • the checking of the application prerequisites and monitoring of the application deadlines, as well as for
  • the preparation of refund applications.

Structured recording of digital of foreign invoices already within the scope of the processes for travel costs or accounts payable will make the subsequent application process considerably easier. At the same time, this will allow for more effective monitoring of the deadlines and the obligations to provide proof.

Conclusion

The recent BMF circular admittedly does not bring about any fundamental changes to input VAT deduction. However, the new rules underscore that the  input VAT refund procedure is becoming increasingly digitalised and formalised. For the companies concerned this would be a good time to review existing processes relating to all aspects of the refunding of foreign VAT. In doing so, it is not uncommon to identify refunds that have hitherto not been claimed and which would therefore constitute additional liquidity.