Businesses that sell goods and services to other European countries are required to report these cross-border sales by using a recapitulative statement. This article explains what a recapitulative statement is and how to create one. In addition, we explain who and which products are subject to this obligation, what deadlines apply and what penalties can be imposed for non-compliance.

What's in this article?

• What is a recapitulative statement?
  
• What is the purpose of a recapitulative statement?
  
• Which sales have to be included on a recapitulative statement?
  
• Who is subject to the reporting obligation for a recapitulative statement?
  
• How to create a recapitulative statement
  
• What deadlines apply for a recapitulative statement?
  
• What are the consequences of incorrect information, late submission or non-submission?
  

What is a recapitulative statement?

A recapitulative statement is a report that businesses send to the tax office to declare their intracommunity sales. Based on this regular statement, tax offices in European Union countries can check that cross-border product supplies and services have been taxed correctly. The legal basis for a recapitulative statement is Section 18a of the German VAT Act (UStG).

What is the purpose of a recapitulative statement?

The recapitulative statement is an important part of the value-added tax (VAT) control procedure within the European Union. It was introduced to safeguard the tax revenue of member states when internal borders within the European Union were lifted and the European internal market was introduced at the turn of 1992/1993. Since then, cross-border sales of goods have been handled as intracommunity supplies and cross-border sales of services as intracommunity services. Both legal instruments simplify intra-European trade.

The process is simplified by charging VAT in the recipient's country, which eliminates a significant bureaucratic burden for the invoicing businesses. This is because without the regulation, they would have to pay the VAT to the tax office in the respective other EU country. As part of the intracommunity service or supply, they can issue a VAT-free invoice. The receiving business then remits the VAT to the local tax office. All intracommunity sales have to be listed in a recapitulative statement and sent to the local tax office for inspection.

What sales have to be included on a recapitulative statement?

A recapitulative statement must list all products and services that a business sells to other European Union countries and for which no VAT is levied in Germany. In detail, these include:

• Intracommunity supplies: pursuant to Section 18a(1) and (6) of the UStG, which means cross-border supplies of goods and products between businesses.
  
• Intracommunity other services: pursuant to Section 3a(2) of the UStG, which means services that a business provides in another European Union country.
  
• Intracommunity triangular transactions: pursuant to Section 25b(2) of the UStG, which means a chain transaction between three businesses domiciled in different European Union countries.
  

Who is subject to the reporting obligation for a recapitulative statement?

A recapitulative statement must be prepared by:

• Businesses within the meaning of Section 2(1) of the UStG
  
• Non-independent legal entities within the meaning of Section 2(2)(2) of the UStG (subsidiary business)
  
• Flat-rate farmers and foresters
  

In principle, the reporting obligation applies to all businesses with intracommunity sales. This also includes freelancers and traders. However, the regulation excludes small-scale entrepreneurs within the meaning of Section 19(1) of the UStG. Since small-scale entrepreneurs are not required to remit VAT to the tax office, no VAT is stated on invoices or charged by small-scale entrepreneurs. As a result, they are not included in the reporting obligation for a recapitulative statement.

How to create a recapitulative statement

Recapitulative statements are created and sent exclusively using electronic methods. In Germany, this is done through the ELSTER portal or the BZSt online portal. This requires users to register with the respective portal.

Learn more about ELSTER.

Recapitulative statements through ELSTER

It only takes a few short steps to create recapitulative statements through the ELSTER portal:

1. Enter your VAT identification number.
   
2. Select the reporting period (the year and the month or quarter).
   
3. Click "Next".
   
4. Enter your business data (name, address and telephone number).
   
5. Click "Next".
   
6. Enter the VAT identification number of the business that received the intracommunity products or services from you, plus the generated sales. If this applies to multiple businesses, you can add extra lines to add the relevant VAT identification numbers and sales figures.
   
7. Check that the data entered is complete and correct.
   
8. Send the recapitulative statement.
   

The recapitulative statement is then submitted together with the advance VAT return.

Note: The details in both documents must match, as intracommunity sales also have to be included in the advance VAT return.

What deadlines apply for a recapitulative statement?

The reporting period for a recapitulative statement is generally each quarter – this applies to all intracommunity supplies and triangular transactions. For intracommunity services, the reporting period is also each quarter, but only if the value of these services does not exceed €50,000 within the three-month period. If sales exceed this amount, intracommunity services must be reported monthly.

The recapitulative statement must be submitted by no later than the 25th of the month following the reporting period – regardless of whether the advance VAT return is submitted monthly or quarterly. If no intracommunity sales accrue during a given reporting period, no recapitulative statements need to be submitted to the tax office.

Pursuant to Section 18(2) of the UStG, alternative provisions apply to "annual payers": businesses that do not submit a VAT return and have to make advance payments to the tax office can submit the recapitulative statement on an annual basis. In this case, the deadline is the 25th of the month following the reporting period. However, this requires that:

• The sum of all the business's supplies and other services in the previous and present calendar years do not exceed €200,000
  
• The sum of the business's intracommunity sales in the previous and present calendar years do not exceed €15,000
  
• The supplies of goods do not involve the delivery of new motor vehicles to businesses with foreign VAT identification numbers (Section 1b(2) and (3) of the UStG)
  

What are the consequences of incorrect information, late submission or non-submission?

If a recapitulative statement contains incorrect information or if details have been missed, businesses can exercise their right of correction. They can correct errors and amend the recapitulative statement within one month, starting from the date on which the error was detected. In the ELSTER portal, corrections can be entered via the "Recapitulative statement" form that is used for the statements in the first step. Businesses must submit a separate correction statement for each reporting period that requires correction. The "Corrected statement" field (Code 03) is selected on the "Selection" page for this purpose. Information reported correctly in the original recapitulative statement does not have to be repeated in the correction statement.

If the submission is late, the business will be contacted by the tax office with a request to submit the recapitulative statement as soon as possible. If the business fails to comply with this request in time, it may be liable to a late payment penalty of up to €2,500 and an administrative fine of up to €5,000. Any person who fails to submit the recapitulative statement on time is committing an offence (Section 26a of the UStG). This also applies if the information on the recapitulative statement is intentionally incorrect or incomplete. Correct submission of the recapitulative statement can be enforced by legislation (see Section 18a(11)(1) of the UStG sentence 1 in conjunction with Section 328 et seq. German Tax Code (AO)). In this case, businesses can be made to pay penalties of €25,000.

The data in the recapitulative statement can be queried at any time by the tax authorities of European Union member states using an automated procedure. If doubts regarding the basis of the data cannot be dispelled, each tax authority has the right to obtain further information from the competent authority by means of a separate request for information. In Germany, the competent authority is the "Bundeszentralamt für Steuern" (Federal Central Tax Office).

To ensure compliance with all applicable laws and regulations on intracommunity sales, businesses should pay close attention to invoicing and taxation. Professional support may also be helpful. For example, Stripe Tax enables businesses to automate their taxes on all their transactions and charge the correct amount of tax automatically. For more information about Stripe services, get in touch with the Stripe Sales team.