Value-added tax (VAT) is one of the key forms of tax in the business world. The majority of businesses in Germany regularly collect VAT from customers, which they then remit to the tax office. Since VAT is a pass-through item, it comes with a lot of reporting and disclosure obligations. Errors and omissions can prompt the tax office to question the information provided in a return and issue a VAT assessment notice. A lot of the time, this can lead to back taxes.

This article will tell you what a tax assessment notice is, how it’s generated, and its significance for businesses in Germany. We’ll also walk you through the timeline for VAT assessments, highlight typical errors that can prompt assessment notices, and provide guidance on how to file a timely objection to a VAT assessment notice.

What’s in this article?

• What is a VAT assessment notice?
  
• VAT assessment timeline
  
• What errors lead to a VAT assessment notice?
  
• Can businesses file objections to VAT assessment notices?
  
• How can businesses avoid back taxes from a VAT assessment notice?
  

What is a VAT assessment notice?

A VAT assessment notice is a formal document in which the tax office determines the final amount of VAT a business in Germany owes for a calendar year. The tax office typically issues an assessment notice only if it believes the information declared in the business’s annual VAT return is incorrect. This decision is based on a full audit of the business’s sales and input tax figures by the tax authorities.

Allocation of sales for VAT purposes

Businesses and self-employed persons who are liable for VAT in Germany are obligated to file regular returns with the tax authorities, declaring how much VAT they have collected from their customers. Depending on how much VAT they paid the previous calendar year, they file preliminary VAT returns either monthly or quarterly. Additionally, they have to file an annual VAT return at the end of the calendar year, declaring their total taxable sales across the entire year, and their deductible input tax. The annual return summarizes the preliminary returns already filed for the year and is used by the tax office to assess the final VAT owed for the year.

Once the annual VAT return has been filed, the amount of VAT declared is considered assessed, unless the tax office questions any of the information provided. This tax assessment is subject to review, however. As long as the tax office accepts the information as declared, it won't issue a separate VAT assessment notice. However, if the tax office identifies anomalies or other irregularities, it will determine how much VAT is owed by issuing a VAT assessment notice. This notice serves to finalize the preliminary assessment, making it a final assessment.

Purpose of VAT assessment notices

A VAT assessment notice fulfills several key functions for businesses in Germany. It establishes the tax office’s interpretation of sales and input tax for the calendar year. In addition, it legally establishes any deviations from the business’s own figures and forms the basis for the actual additional payment or refund of tax. For businesses, the assessment notice is an important document, because it formally finalizes their VAT accounting for the year. It also provides reliable figures for financial planning and liquidity management.

VAT assessment timeline

The VAT assessment timeline illustrates the steps involved in preparing a VAT return for a business, as well as when returns and assessment notices are typically filed and issued.

Preliminary VAT return deadlines

Businesses and self-employed persons in Germany who paid more than €9,000 in VAT the previous year must file monthly preliminary VAT returns. Those who paid between €2,000 and €9,000 in VAT can submit quarterly returns. If the VAT due for the previous calendar year is less than €2,000, the tax office may exempt the business from filing returns. Newly established companies are always required to file monthly preliminary VAT returns during their first and second year, regardless of how much VAT they owe.

Whatever their filing cycle, businesses must send their preliminary returns by the 10th of the following month and settle any amounts owed. If the 10th falls on a weekend or public holiday, the filing deadline is postponed to the next business day. The deadlines for 2026 are as follows:

Deadlines for submitting monthly preliminary VAT returns in 2026

01/12, 02/10, 03/10, 04/10, 05/11, 06/10, 07/10, 08/10, 09/10, 10/12, 11/10, 12/10

Deadlines for submitting quarterly preliminary VAT returns in 2026

01/12, 04/10, 07/10, 10/12

Businesses in Germany have the option of postponing their filing deadline for their preliminary VAT returns by one month by applying for a permanent extension. With a permanent extension, a preliminary return that would usually have been due July 7 now has to be transmitted to the tax office by August 10. This reduces the pressure on accounting departments and gives the business more financial flexibility, at least temporarily. A permanent extension can be particularly useful for startups and smaller businesses, as it offers additional liquidity and more flexibility in planning finances.

Annual VAT return deadline

At the end of the calendar year, businesses compile the provisional figures from their preliminary returns in an annual VAT return. This return must be filed with the relevant tax office no later than July 31 of the following year. If the annual return is prepared by a tax advisor, this deadline is usually extended to February 28 of the year after.

According to Section 168 of the AO (German Fiscal Code), once a tax return has been filed, it is initially considered provisionally correct. However, the tax office may still review the information provided and make corrections where necessary.

Receiving a VAT assessment notice

Where corrections are necessary, the tax office will issue a VAT assessment notice. This notice turns the tax provisionally assessed into a final tax assessment. Audits of annual returns and the issuing of VAT assessment notices can take anywhere from a few weeks to several months, depending on the tax office.

Any back taxes must be settled within one month of receiving a VAT assessment notice. If you have paid more VAT than you should have, the tax office will refund the difference.

What errors lead to a VAT assessment notice?

Generally speaking, the tax office will issue a VAT assessment notice if, during its review of an annual return, it identifies irregularities, missing information, or formal errors. Below, we’ve listed the most common sources of errors:

• Discrepancies between preliminary returns and annual return: The VAT amounts reported in the preliminary returns do not match the information in the annual return.

• Taxable sales not declared or declared incorrectly: Sales have been mistakenly treated as tax-free or allocated to the wrong category.

• Input VAT errors: Input VAT was not claimed, was claimed multiple times, or originates from invoices that are nondeductible.

• Invoice formalities: Invoices are incomplete because they are missing the mandatory information required by law, such as a tax ID number, invoice date, or description of services.

Businesses in Germany should always check their preliminary and annual VAT returns carefully. Ideally, errors should be identified before the tax office reviews the documents. Oversights can lead to additional admin, followup questions, correction notices, or back taxes.

Can businesses file objections to VAT assessment notices?

Businesses in Germany can file objections to a VAT assessment notice if they do not agree with the assessment. The legal basis for objections is Section 347 of the AO. By filing this formal appeal, a business requests that the tax office review its assessment and amend it if necessary.

Objections must be filed in writing or electronically within one month of the VAT assessment notice being received. The objection period begins on the date when the notice is served. If you fail to file an objection by the deadline, the assessment notice becomes legally binding and can generally be contested only under certain circumstances, such as through restitutio in integrum.

In its objection, the company should state clearly which parts of the assessment notice it considers incorrect or incomplete and what corrections it believes are necessary. The tax office will then review the points raised and may amend, cancel, or confirm the VAT assessment notice. The original assessment notice generally remains effective until a ruling has been made on the objection, unless a suspension of enforcement has been applied for.

An objection to a VAT assessment is an important tool for correcting formal or factual errors without having to immediately resort to filing an appeal before the tax courts. It protects businesses against the negative effects of incorrect tax assessments, and allows them to clear up the issue with the tax authorities promptly.

How can businesses avoid back taxes from a VAT assessment notice?

Back taxes arising from a VAT assessment notice are frequently not the result of serious, isolated errors, but rather are caused by smaller inconsistencies that add up over the course of a year. Businesses can reduce this risk by structuring their VAT processes clearly and reviewing them regularly.

Identify typical sources of errors early

The most common reasons why the tax office might flag a return include errors in handling taxable sales, incomplete or incorrect incoming invoices, and differences between preliminary and annual VAT returns. Duplicate amounts or amounts that are accidentally omitted from a return can also prompt the tax office to take corrective action and issue a VAT assessment notice. Reviewing your figures regularly reduces this risk significantly.

Review VAT processes regularly

It’s a good idea to record VAT-related transactions promptly, check all invoices for mandatory information, and verify the tax rates applied. Businesses should also prepare their preliminary returns during the year in such a way that they match up with the annual return, rather than treating each return as a separate process. This will allow you to identify and correct discrepancies early.

Record VAT assessments correctly

It’s also important to record a VAT assessment correctly on your books. Back taxes or rebates resulting from a VAT assessment must be recorded clearly to ensure consistency in tax accounts, annual financial statements, and liquidity overviews. The way you record a VAT assessment depends on the accounts system you’re using and your internal accounting processes.

Use digital support

Digital solutions help businesses minimize errors. Stripe Tax automatically calculates and records VAT for individual transactions and supports consistent tax data across all billing periods—making it easier to prepare both ongoing preliminary returns and annual VAT returns.