Many Americans are used to doing a little mental math in the grocery or retail store and adding a percentage onto the advertised price because of sales tax. In Germany, a 19% “value-added tax” is already built in to products and services, with a 7% tax for medical, groceries, bus and train tickets, lodging and books, so the price you see is the price you pay. But through the Value Added Tax Relief Program, personnel stationed in Germany can get a tax refund with purchases made on the economy.
Currently, the VAT is 16% and 5%, in an effort to jumpstart the economy as a result of COVID-19. The normal rates are expected to resume in the coming months.
In order to enjoy the benefits of this program, it’s important to understand the process for using VAT forms.
Sponsors must attend a briefing at the VAT office. During this initial visit, the sponsor can add family member names and buy VAT forms.
The NF-1 VAT form costs $5 and can be used for purchases up to €2,499.99. Only 10 of these forms can be checked out at a time, but once one is returned, that household is eligible to buy a new one. The NF-1 form is commonly used for purchases like train tickets, short hotel stays, groceries and clothing.
Customers can buy VAT forms at any VAT offices (Ramstein, Stuttgart, etc., and turn in at any office).
Therefore it is recommended, especially when traveling, for a customer to leave two or three forms in the system (not purchasing all 10 at once), so they can pick up one at the nearest VAT office.
Multiple purchases from the same vendor can be put onto a single form, as long as the purchases were made during the same calendar month and the refund is collected before the end of that month. The VAT form must also have been purchased before the date of the first transaction and be valid through the last. Shoppers should beware: some vendors may not fully understand these rules and offer to violate them; however, the customer is ultimately responsible for using the forms properly. If a VAT form is used improperly, the customer must correct it by paying the tax, said Marlene Balzer, program manager for the VAT/UTAP office.
Purchases over €2,500
The NF-2 VAT form costs $65 and is for purchases of €2,500 or more — like a car, for instance. Before an NF-2 can be issued, certain requirements must be met. “We need a quote showing what’s being purchased and how much it would cost without the tax,” Balzer said.
The buyer also needs to show they are capable of making the payment in full, she added. “That can be done one of two ways. One is with a cashier’s check, if they’re basically buying it straight out. They can also get a loan letter, showing that they’re approved to finance the full amount without tax.
The VAT office should look at the cost estimate prior to getting a cashier’s check or loan letter.
“You cannot pay or negotiate before you have the VAT form and still receive tax relief,” Balzer said. “You must get a cost estimate from the vendor, but if you put down any money at the time — if you pay one penny down — then we can’t issue that VAT form.”
Another thing to be aware of when making big purchases, is that a customer cannot split up items from the same vendor made on the same day in order to use NF-1 forms instead of an NF-2. For example, if someone purchases a bed for €1,500 and a couch for €2,000 from the same store on the same day, they cannot use one NF-1 form for the bed and another for the couch, regardless of what the vendor says.
Only one NF-2 form can be issued at a time, and it does not count against the 10 outstanding NF-1 forms.
Keep in mind
There are several items shoppers should keep in mind before using their VAT forms. The agreement between the German and American governments doesn’t force all stores to offer tax relief.
“There’s no law requiring shops to accept VAT forms. It’s voluntary based on the vendor,” Balzer said.
Each VAT form has three sheets of carbon copies. The vendor keeps the yellow copy, the pink one is for the shopper’s personal records and the white one should be turned in at the drop box located just outside the ramp entrance of Bldg. 1023 East.
Forms are good for two years from the date issued, but they don’t work retroactively. “If you bought something yesterday and didn’t have the VAT form, you couldn’t get a VAT form today and get the tax off for the day before,” Balzer explained.
Tax relief is a benefit to military living overseas; however, violating the VAT rules can result in a loss of money, and in more extreme cases revocation of VAT privileges. The VAT office aims to prevent the latter. “When in doubt about when you can or cannot use a VAT form, contact the VAT office,” Balzer said. “We encourage you to call. We’re here to serve the public.”
Customers living on the economy should also make an appointment with the Utility Tax Avoidance Program to avoid paying taxes on their utility bills.
The U.S. Army Garrison Wiesbaden UTAP/VAT office sees customers Monday to Friday, 8:30 p.m. to 4 p.m. by appointment only (unless outprocessing) and is located in Bldg. 1023 East, Room 151, and can be reached at (0611) 143-548-9107 or DSN 548-9107.
For more information, visit: https://wiesbaden.armymwr.com/programs/value-added-tax-vat.