Soldiers, civilians and dependents can get refunds on sales tax
In the United States, a sales tax is added at the time of purchase. In Germany, a 19 percent value-added tax is built in to products and services (with a reduced 7 percent tax for food), which can sometimes come as a surprise to newcomers learning to manage their finances while overseas.
The Value Added Tax (VAT) Relief Program can be used by Soldiers, civilians and dependents to obtain a tax refund when purchases are made on the economy, but in order to enjoy the full benefits of this program it’s important to under the process for acquiring and using the forms.
The first step is going to the VAT office. “There’s a briefing that we go over with people when they first come in to get VAT forms,” said Randal Randers, tax relief clerk at the VAT and Utilities Tax Avoidance Program office. “The briefing goes over a few things, like the general processes for the forms, and also the few things they cannot use the forms for.” Sponsors must be present for this step, as they are ultimately responsible for any outstanding forms once they start out processing.
Two types of VAT forms are available. The NF-1 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 you return one, you are eligible to take out a new one. The NF-1 form is commonly used for purchases like train tickets, short hotel stays, groceries and clothing. Multiple purchases from the same vendor can be put onto a single form.
The other document, the NF-2 VAT form, costs $60 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,” said Randers.
The buyer also needs to show they are capable of making the payment in full, he added. “That can be done one of two ways. Either with a cashier’s check, if they’re basically buying it straight out. [They] can also [get a] letter of intent, or a loan letter, showing that they’re approved to finance the full amount without tax.”
Only one NF-2 form can be issued at a time, and does not count against the 10 outstanding NF-1 forms.
There are several items shoppers should keep in mind before using their VAT forms. The agreement between the German and American government doesn’t force all stores to offer tax relief.
“They can accept [VAT forms], but there’s no law requiring shops accept them on the German side. It’s voluntary based on the vendor,” said Clifford Wix, program manager for the VAT/UTAP office.
“I have seen situations where one vendor one day said ‘yes’ and then another family went back the next day, and because they got a different cashier, they said ‘no.’” The VAT office provides newcomers with a list of local vendors who will usually accept the forms.
Even at VAT friendly stores, you may run into some confusion, according to Randers. “If it’s a big box store like IKEA, MediaMarkt, [or] Real, anywhere where you have multiple registers, usually the cashiers aren’t trained on how to fill these out.”
“So the general procedures at most of those stores is you go through the register, just as you normally would, and then go to the Customer Service desk once you’re done with the purchase to get your tax refunded.”
Other vendors are more comfortable with the VAT process. “If you go to a small mom and pop shop [or] somewhere where there’s maybe one or two cashiers at most, usually they’re just going to fill the forms out at the register, and they will not charge any taxes on the purchase,” Randers explained.
Each VAT form has several sheets of carbon copies which must be properly processed. The vendor keeps one copy of the form; the shopper should keep two copies; one for their personal records and one to turn in at the drop box located just outside of the VAT office.
While there is no specific due date for the drop box copy to be returned, the sooner the better, in case there are any mistakes with the purchase or documentation. Confirming that a form is completely filled out at the time of the purchase is a simple way to avoid confusion, and ensure you are saving what you can.
Forms are good for two years when they are issued, and are no longer valid after the date printed on them. If you return an expired form to the VAT office, you can’t get a full refund, as the document has personal information on it and can’t be reused. However, you can receive a $2 return credit that goes toward a new form.
The documents 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,” explained Wix.
“You cannot pay or negotiate before [you have] the VAT form [and still receive tax relief],” he said. “You can get a cost assessment, but if you put down any money at the time — [if you] pay one penny down — then we can’t issue that VAT form.”
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 revoking your VAT privileges. The VAT office aims to prevent the latter. “When in doubt [about] when you can or cannot use a VAT form, call this office. We have the regulations here in the office on a lot of the grey areas.”
The U.S. Army Garrison Wiesbaden VAT office is located in Bldg. 1023 East, Room 151, and can be reached at DSN 548-9107 and civ (0611) 143-548-9107.