As a business, you may generally reclaim VAT charged to you by other businesses as input tax (Vorsteuer) and have it refunded by the tax authority or offset against your own VAT liability. The right to deduct input tax requires, amongst other things, that you hold a proper invoice for the supply or other service received. The minimum details required are set out in sections 14 et seq. of the VAT Act (UStG) or, for example, at www.muenster-stb.de/service/downloads-formulare/.
If even a single invoice detail was missing, tax inspectors had previously denied the input tax deduction. While it was possible to have the invoice corrected or supplemented by the issuer, the right to deduct input tax was only available from the month of the corrected invoice.
Example
You received a goods delivery on 12.1.2010 for 100,000 EUR plus 19,000 EUR VAT and claimed the input tax of 19,000 EUR in the VAT return for January 2010.
During a tax audit covering the years 2010-2012 in January 2016, this invoice is queried because the delivery date is missing. The tax authority demands the VAT of 19,000 EUR in spring 2016 and charges interest on arrears for 4 years (1.4.2012 to 31.3.2016), i.e. 19,000 EUR x 48 months x 0.5% per month = 4,560 EUR interest.
You have the invoice supplemented in March 2016.
Previously, you could only reclaim the input tax with effect from March 2016 and were permanently burdened with interest of 4,560 EUR.
The European Court of Justice ruled on 15.9.2016 - C-518/14 that the practice of the German tax authorities is contrary to European law and that retroactive invoice correction is permissible.
In the example above, following the correction, the tax audit no longer produces any additional claim at all. Consequently, no interest arises either.
You may invoke the judgment directly. We are happy to assist with any questions.