VAT business representation Germany deductible

Representation and entertainment are usually (partly) excluded

VAT on expenses of a luxurious nature, on entertainment and on representation is in most cases not, or only partly, eligible for refund from Germany. This is not a special feature of the refund portal, but follows from the scheme itself: a refund country may apply the same restrictions that it also applies for its own entrepreneurs regarding domestic VAT deduction. Representation costs, relationship gifts, expenses for guests or for entertainment fall in the practice of many EU countries under such restrictions, and Germany is no exception to this.

What this concretely means for a given cost item depends on how Germany precisely defines that item and what exceptions apply to it. A business dinner with a client may be treated differently than a festive gathering for staff, and a relationship gift may again have a different status than an expense for a trade fair stand. For this reason, this type of cost is examined separately when bundling a request: where doubt exists as to whether an expense qualifies as representation, entertainment or luxury, that is assessed against what has been established for Germany, rather than the item being automatically included or automatically excluded.

What this is based on

The basis for this is set out in Article 4 of Directive 2008/9/EC: that article provides that refund is refused for VAT which is not deductible under the rules of the refund country, and explicitly names expenses of a luxurious nature, entertainment and representation as categories for which a Member State may maintain such exclusions. Which exclusions Germany concretely applies and with what exceptions are described in the Requirements list of the Tax Administration per refund country and in the Taxes in Europe Database of the European Commission, which the nation